TELEPHONE No. : 011- GOVERNMENT OF INDIA 24622495 AERONAUTICAL INFORMATION SERVICES AIC Aeronautical : VIDDYAYX DIRECTOR GENERAL OF CIVIL AVIATION Sl. No. 03/2019 E-Mail: [email protected] OPPOSITE SAFDARJUNG AIRPORT 28.01.2019 Fax 011-24652760 NEW DELHI-110003
File No.09/18/2008-IR
This AIC is issued for dissemination of the directions of Ministry of Civil Aviation in their letter No. AV.20036/2/2019-AD dated 18.1.2019.
(B.S. BHULLAR) Director General of Civil Aviation
ISSUE OF AIC IN RESPECT OF AERONAUTICAL TARIFFS AT VISHAKHAPTNAM AIRPORT, FOR THE 1ST CONTROL PERIOD (01.04.2018 TO 31.03.2023)
The Airports Economic Regulatory Authority (AERA), in exercise of powers conferred on them by section 13(1) of the Airports Economic Regulatory Authority of India Act, 2008, vide Order No. 38/2018-19 dated 09.01.2019 and corrigendum to order No. 38/2018-19 dated 11.01.2019 has determined the Aeronautical Tariff for Vishakhapatnam Airport for the 1st Control Period (01.04.2018-31.03.2023) as per the details given in Annexure-I of AERA’s Order No. 38/2018-19 dated 09.01.2019. The copies of the aforesaid Order and Corrigendum are enclosed herewith.
2. These charges shall come into effect on 01.02.2019 in the manner prescribed by AERA.
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[F. No.. AERA/20010/AAI-Vishakhapatnam/CP-II/2016-17] Airports Economic Regulatory Authority of India
Corrigendum to Order No. 38/2018-19
AERA Building, Administrative Complex, Safdarjung Airport, New Delhi -110003
:tiilte of Issue: 11th January, 2019 Airport Operator AirpO~~~~~~i~bil~dia Airport Visakhar>;atna'lJ,Airp6rt
In the matter of Determination ~1gl!.~~~~~~tl'~~liTariffsin respect of Visakhapatnam Airport for the first Control Peri,()d(0,1·.()~.2Qla4131.03.2023)
1. The Authority vide Order nb:~g72(h8n'gidated 09.01.2019 determined the tariffs in respect of Visakhapatnam Airport, for the first control period (01.04.2018 to 31.03.2013. 2. In the aforesaid order date of implementation / effective date of order has been inadvertantly mentioned as "01.03.2019" instead of "01.02.2019" due to typographical error. 3. The Tariff Q~r9ii'~PPi"~,R~i; bYJg~.~ER~:'"t§4 V' ~irport for the period 01.02.2019 to 31.0@;~023 at'.t}ronexure+,1i;may '~~{ re I'bng with the general condition as given below:
"All Tariff charges are C;""l-"U\.'!"l"Lq'u·.'.. " •. < ...•• ,.
3. The other terms No. 38/2018-19 dated 09.01.2019 shall remain
By the Order of and in the Name of " Authority I '"
..---- eettra Sahu) AGM (Fin.) To
Airports Authority of India Rajiv Gandhi Bhavan Safdarjung Airport New Delhi -110 003
Corrigendum to Order No. 38/2018-19 Page 1 of i File No. AERA/20010/AAI-Vishakhapatnam/CP-11I201 6-17 Order No. 38/2018-19
r ' 9th January, 2019
AERA Building Administrative Complex Safdarjung Airport New Delhi - 110 003
Order No, 38/2018-19 Page 1 of 73 Table of Contents
1. LIST OF ABBREViATIONS 3
2. INTRODUCTION 4
3. SUMMARY OF STAKEHOLDERS' COMMENTS ON CP NO. 23/2018-19 6
4. MULTI YEAR TARIFF PROPOSAL SUBMITTED BY VIZAG AIRPORT 7
" 5. METHODOLOGY FOR TARIFF CAbCUlJATION 9 . . ' .. \ " . 6.
. . 7. REGULATORY ~SSET BASE (RAB) AND DEPRECIATION 17
8. FAIR RATE OF RETURN (FRoR) ; ~ ;. ~ 34 . 'i 1/ . I • . r•. - . \ 9. OPERATION AND MAINTENANCE EXPENDITLJ RE 36 'i.tt, ,< . - : .
I .\.:' , '0', !, 10. REVENUE FROM NON-AERONAUTICAbSERVlCES 40 ' f ~' ~ l~ .' .~ 0. ',;, .: , ... • i . • I· J" . 11. TAXATION : f..; 44
12. QUALITY OF SERVICE : ~ ~ 47
13. PRIOR PERIOD SHORTFALL 49
14. AGGREGATE REVENUE REQUIREMENT AND SHORTFALL COMPUTATION 51
15. TRUE-UP : ~ 54
16. REVENUE FROM AERONAUTICAL SERVICE'S ;..·.; 55
17. MULTI YEAR TARIFF PROPOSAL SUBMITTED BY VIZAG AIRPORT ~ 61
18. ANNUAL COMPLIANCE STATEMENT · 66
19. SUMMARY OF PROPOSALS 67
20. ORDER 69
Order No. XXi 2018-19 Page 2 of 73 1. LIST OF ABBREVIATIONS IRR Internal Rate of Return
AAI Airport Authority of India Cost of equity ACI Airports Council International LO Liquidity Damages AERA orthe Airport Economic Regulatory m meter Authority Authority of India Mechanized Environmental MESS Aero Aeronautical Support Services AERA MoCA Ministry of Civil Aviation (Terms and Conditions for MoU Memorandum of Understanding Determination of Tariff Airport Guideli nes for Airport Operators) Multi Year Tariff Order Guidelines, 2011 : ."; I dated 28 February 2011 , Multi Year Tariff Proposal AMC Annual Maintenance Coo\(act . Non-Aeronautical Revenues ANS Air Navigation Service National Civil Aviation Policy 2016 ARR Aggregate Revenue RequirementNlPFP National Institute of Public Finance and Policy ASQ , rt S ' Q tlt ' . II . Airpo ervice ua I y .. f Non'-Aero Non-Aeronautical . " ATC Air Traffic Control OPEX Operating Expenditure \ " i ATM Air traffic movement J;I;{/"l " JP.,L. !~' Profit and Loss ' CAGR Ra ~f)ia. Compounded Annual 'Growth. ' Per annum CAPEX Capital Expenditure . PA ~ v~tem Public Announcement System CHQ Central Headquarters PAX Passenger(s) CISF Central Industrial Security Force PSF ' Passenger Service Fee Communication, Navigation CNS & Surveillance PV Present value Corporate Planning & CP&MS RAB Regulated Asset Base Management Systems Common User Terminal RHQ Regional Headquarters CUTE Equip,ment SCCTV Earnings Before Interest, Security Closed-Circuit Television EBITOA Tax, Depreciation arid . SO Security Deposit Amortisation SLM Straight Line Method EMO Earnest Money Deposit Electronic Private Branch Sq.m. Square Metre EPBX Exchange T.R. Stall Travellers Requisite Stall F&B Food and Beverages UOF User Development Fee Flight Information FIOS Display Systems USO US Dollars Vishakhapatnam FRoR Fair Rate of Return Vizag Airport Airport FY Financial Year w.e.f. with effect from GOAP Government of Andhra Pradesh XIBS X-ray Inline Baggage System GOI Government Of India YoY Year-on-Year Instrument meteorological IMC conditions INR or f Indian rupees
Order No, XXI 2018-19 Page 3 of 73 2. INTRODUCTION
2.1. Visakhapatnam Airport ("Vizag Airport") is located in the city of Visakhapatnam, which is the major commercial center in the state of Andhra Pradesh. Vizag Airport is owned by INS Dega , a Naval Air Station of the Indian Navy and is operated as a Civil Enclave by Airports Authority of India ("AAI"). It commenced civilian operations in 1981 with one flight per day and presently is the busiest airport in Andhra Pradesh .
2.2. Technical details of Vizag Airport are given in Table 1.
Table 1: Technical Details of Vizag Airport (r; ,\\ ~ ,,\!, 7.. ' r r: " ,'~ A, Particulars " Details I . , ... 'iT. :v ~ Total land area available 350.31 acres " .. .. Tota l built-up area of Existing area 21,9J8 .48.Sqtm. Integrated Terminal Expected to increi;lse'by 10,150 sq.m. on account of linear expansion Building (ITS) I . ~i [i II Runway Dimension oftl'le,runway strip 3170m x 150m Two runwa y§: '/ . c':\" Primary/ r;D c;i in nmway .( ~8/!10, ,3050m x 45 m) SecondarVrRunWay;,(OS/23r,2090m x 45m) used only by Indian Navy Apron Total numbEko fa,:jr0n' ; l5ays~ '14 Total apron bay area- 1,08,9EF Sq.m. this is inclusive of 56,610 Sq.m. (330m x 13-7rn :and150'r:n ><: 76 m) for 8 parking bays and 52,357 Sq.m . for 6 new parking bays which were completed and commissioned on September 2018
04 Apron Flood l.iqhts Taxiways Five taxiways: N1(130mx15m) N2 (130 m x 15 m) N3 (1'S3rn x 23m) N4 (187m x 23m) II N5 (365mx 23m) • I ATC The ATe is operational for 24 hours 'and manaqed by the Indian Navy Peak hour capacity Existing peak hour capacity for departure, arrival and transit is 400 domestic and 300 international passengers
This Is projected to increase to 600 for domestic and 450 for international passengers after completion of linear expansion of terminal building Check-in Counter 20 domestic and international combined check-in counters, with CUTE facilities Additional 8 CUTE facilities will be available after completion of linear expansion Other Details One Category 7 Fire Station Aerodrome Reference Code is 4D Aircraft Suitability for A330 in Instrument Meteorological Conditions (IMC) Suitable for code C aircraft
2.3.
Order No. XX/2016-17 Page 4 of 73 2.4. The Authority held a meeting on 10.12.2018 with the stakeholders to discuss the proposals in the Consultation Paper.
2.5. This order of the Authority takes into account the proposals of Vizag Airport, views expressed by stakeholders in the meeting, written submissions received from stakeholders and examination by the Authority with reference to its guidelines for airport operators.
Order No. 38/2018-19 Page 5 of 73
. : 3. SUMMARY OF STAKEHOLDERS' COMMENTS ON CP NO. 23/2018-19
3.1. In response to Consultation Paper No. 23/2018-19, the Authority received several responses from stakeholders . The list of stakeholders, who have commented on the Consultation Paper is presented below.
Table 2: Summary of stakeholders' comments S.No. Stake holder Issues commented 1. Government of Andhra Pradesh (GoAP) • Traffic Forecast Fair Rate of Return (FRoR) ~ . 6 p ;e r~ t i o n and maintenance expenditure , ~", ~ev ~rlu e from Aeronautical Services 2. Federation of Indian Airlines (FIA)
3. IOCl • Revenue from Aeronautical Services 4. HPCl • Revenue from Aeronautical Services 5. SAOA • Revenue from Aeronautical Services
3.2. The Authority has . carefully, considered . the comments made by stakeholders and has obtained the vieWs of Vizag Airport onthese comments. Jheposition of the Authority in its Consultation Paper No. 23/2018-19, issue-wise comments of the stakeholders on the Consultation Paper, response from Vizag Airport thereon, Authority's examination, and its decision are given in the relevant sections of this order.
Order No. 38/2018-19 Page 6 of73 4. MULTI YEAR TAR IFF PROPOSAL SUBMITTED BY VIZAG AIRPORT
4.1. Vizag Airport filed its original MYTP submission on 12.09.2017 for the first control period from 01.04.2016 to 31.03.2021.
4.2. The Authority noted that more than 2 years had already elapsed in the first control period proposed by AAI, which might require a significant change in tariff during the remaining control period to match the Aggregate Revenue Requirement CARR"). It is also likely that the tariff will need to be reduced significantly for the next control period. Such steep changes in tariff are best avoided and accC?rdingly ~tli ~ Authority vide letter to AAI dated 25.06.2018 has f r t;"-' • proposed that the first control peridd ' ~for " 'Vizag Airport should be from 01.04.2018 to - - . . 31.03.2023. The Authority also'clarifled thatth ~ shortfall, if any, for the first two years may be , , taken to consideration for tariff determlnanon.
4.3, Subsequently, Vizag Airport file<;l itsrevised MYTP on 18.07.2018 for the control period from \ I iI! I 01.04.2018 to 31.03.2023. Further, Vif:ag ;:Airport in its revised MYTP submission has " " , , calculated shortfall w.e.f. 01.04:201,6 Jo ~ '31~·0.3 :2018 and included it in the present value of
ARR for the first control peri t ~ " I, .. ' ./,?: ' , ' ::' , l~ 4.4. Salient features of Vizag AirpbCrt's'M Yf:r P';S ~ 'i5 rJtssion :
4.4.1. Effective date of tariff d~lerIT\inati9n 1ha~ 4.4.2. Actual traffic has been updated upto FY 2017-18 and projected for FY 2018-23 as per data received from Department of Corporate Planning & Management Systems, AAI ("CP&MS"). 4.4.3. Capexamountinq to ~81 .80 crores has been considered in MYTP. 4.4.4. As per hybrid til( mE?thodology,the RegWlatory Asset Base CRAB") as on 01.04.2016 , .1; has been segregated into Aeronautical assets, Non-Aeronautical assets and Common Assets. Common assets have been further bifurcated into Aeronautical assets and Non-Aeronautical assets. The expenses appearing in the Trial Balance for the FY 2016-17 and FY 2017-18 have been bifurcated into aeronautical expenses, non aeronautical expenses and common expenses. 4.4.5. As per the submission of Vizag Airport, the total area of integrated terminal building is 21,918.48 square meters (Sq.m.), of which 1,501.36 is earmarked for non aeronautical activities, constituting 6.85% of the total terminal building area. Order No. 38/2018-19 Page 7 of 73 Stakeholder comments and the Authority's observations Comments from FIA 4.5. Regarding MYTP submitted by Vizag Airport, FIA submitted that "FIA also submits that it has not been provided with the copies of the submissions of Vizag Airport dated 12.09.2017 & 18.07.2018 and any minutes of AUCC consultation (except dt:07.06.18 AUCC Minutes obtained by FIA from AAI). Project Investment File (PIF), as applicable. Accordingly, in the absence of the receipt ofsuch submissions made by Vizag Airport, FIA is unable to appreciate, assess and comprehend the facts and figures (and any comparison thereto) of the CP in itsefiHre'ty and actuality. " .( I K (r;' t< . . " . .'/ ~ • AA l's submiss ion on FIA's comments) " 4.6. AAI submitted that "AAI has submitted the MYTP andallthe relevant documents to AERA for determination of aeronautical tariff. " . ~ .. ,;'. ) ',. I Authority's examination of FIA's commepts ana. AAI's ,s~bmission on FIA's comments ," ; , . , ~ 4.7. With respect to FIA's commEil.l}tson mult i R J e :. s \J.~ m i ss i on s of Vizag Airport and the need to . ]t'A,...... 1,;·./1< rA ll!r . . . .. share them with the stakeholders}thet~4th@nty clarifies that normally the initial MYTP . fl' requires further analysis and ~ e . §. ~ p's ~q~ E:l nt s~ubmissions by Airport Operator are more by way of clarifications, amendment to data, etc. which are fully captured in the Consultation Paper released by the Authority. Therefore, a separate discussion on each of the subsequent submission is Vizag Airport is not required. Order No. 38/2018-19 Page 8 of 73 5. METHODOLOGY FOR TARIFF CALCULATION 5.1. The methodology adopted by the Authority to determine tariff is based on AERA Act, 2008 and the AERA (Terms and Conditions for Determination of Tariff for Airport Operators) Guidellnes, 2011 dated 28 February 2011 . The Aggregate Revenue Requirement CARR") is first calculated by providing for depreciation, return on the RAB, the operations and maintenance ("O&M") expenses, and taxes. The present value of total aeronautical revenues that is estimated to be realized each year during the control period at proposed tariff levels is compared with the present value of th.e. ARR during the control period. In case the present value of aeronautical revenues ~du r i llg the control period is lower than the present value of I '· . , ": t. "< ~- . . ..' 'I ARR during the control period , th e airport operatormay opt to increase the proposed tariff. In ~ , ~ case the present value of aercimauticalrevenues is higher than the present value of the ARR 1; ~ • h~..t. then the airport operator will have to sQitablY reduce its tariff. 5.2. 5.3. The Authority shall determlne the ARR for the current control period on the basis of the following Regulatory Building Blocks : 5.3.1. Regulatory Asset Base (RAB) 5.3.2. Depreciation (D); 5.3.3. Fair Rate of Return applied to the RegUlatorY-Asset Base (FRoR x RAB); 5.3.4. Operation and Maint~nance Expel1~iture(O); 5.3.5. Taxation (T); 5.3.6. Revenue from services other than aercnautlcalservices (NAR). 5.4. Based on the building blocks provided above, the formula for determining ARR under Hybrid Till is as follows: 5 ARR =I (ARRt ) and t o'l ARR t = (FRoR X RABt ) + Dt + O, + T, - 30% of NARt Where 't' is the Tariff Yearin the Control Period; ARRt is the Aggregate Revenue Requirement for year '1'; FRoR is the Fair Rate of Return for the control period ; RAB t is the Requtatory Asset Base for the year '1' ; Order No. 38/2018-19 ·.. ' ...; D, is the Depreciation corresponding to the RAB for the year '1'; o, is the Operation and Maintenance Expenditure for the year '1', which includes all expenditures incurred by the Airport Operator(s) including expenditure incurred on statutory operating costs and other mandate operating costs; Tt is the corporate tax for the year '1' paid by the airport operator on the aeronautical profits; and NARt is revenue from services other than aeronautical services for the year '1' LoP- I ,. ' j. ~ '" ( t 5.5. The detailed submissions prQV l d e ~ by Vizag A!rpprt in respect of the opening RAB, additions to RAB, and other items oh he Regulatory Building Blocks have been discussed in the subsequent sections. 1 Stakeholder comments and the Authority's observations • ,j I' I: Comments from FIA ;:, ~(,~~. I ,.' ,. 5.6. Regarding methodology for t~. ~~C ~l~t)) ¥~j ~ h" FIA $ubmitted that .,.: ".). l~. .' -. "As per para 4.2 of the Consult~'ti~n ,pap Jr: iUsstated that the Authority shall determine tariffs for Vizag Airpott using t/iJ e : :Hybifid~ Tj/l· .m9~el. It is to be noted that FIA has from time to time, advocated the applicatioh of aSingle rill 'model across the eitpotts in India. It is submitted that Single Till is premised on the following legal framework being: (a) Section 13(1)(a)(v) ofAERA Act envisages that while determining tariff for aeronautical services, the Authority shall take into consideration revenue received from services other than the aeronautical services. (b) Clause 4.2 ofAERA Guidelines recognizes Single Till approach which sets out the following components ohtne basis.of which ARR.willbe cal9ulated: (i) Fair Rate OfReturn applied to the RegulatorY Ass€?t Base (ii) Operation &Maintenance Expenditure (iii) Depreciation (iv)Taxation (v) Revenues from services.other than aeronautical services (c) It is submitted that determination of aeronautical tariff warrants a comprehensive evaluation of the economic model and realities ofthe airpott- both capital and revenue elements. AERA 's approach ofHybrid Till for Vizag Airpott deserves to be discarded. (d) In the Single Till Order, Authority has strongly made a case in favor of the determination of tariff on the basis of 'Single Till', It is notewotthy that the Authority in its inter alia Single. Till Order has: (i) Comprehensively evaluated the economic model and realities of the airpott - both capital and revenue elements. (ii) Taken into account the legislative intent behind Section 13(1)(a)(v) of the AERA Act. Order No. 38/2018-19 Page 10 of 73 ':'.. , "..;" , :~ (iv)The criteria for determining tariff after taking into account standards follow ed by se veral international airports (United Kingdom, Australia, Ireland and South Africa) and prescribed by ICAO. (v) The Authority in its AERA Guidelines (Clause 4.3) has followed the Single Till approach while laying down the procedure for determination of ARR for RegUlated Services.' In this respect, the matter must be dealt with by the Authority considering the ratio pronounced by the Constitutional Bench in the Hon 'ble Supreme Court Judgment in PTC vs. CERC reported as (2010) 4 SCC 603 (please ref: Paragraph Nos. 58 to 64 at Page Nos. 639 to 641) wherein it is specifically stated that regulation under a enactment/statute, as a part of requleiory framework, intervenes and even overrides the existing contracts between the regulated entities inasmuch as it casts q-.~t?tl}fOrY~9b.lig~tion on the regulated entities to align their existing and future contracts Wi/Q'ttie ~ald f r:egufa tion s. ~ ~ "' , .., .. '-. ' (vi)The fundamental reasoning bMind 'Single :rill' approach is that if the consumers/passengers are offer;ed cheaper air.;.fares on account oflower airport charges, l .• the volume of passengers is bound to. inc;re.ase leading to more foot-fall and probability of higher non-aeronautical revenue. th~ ,ben~fitof such non aeronautical revenue should be I . II . : . passed on to consumers/pessenqers pnq ;th'r-t can be assured only by way of lower aeronautical charges. It is a pro(Jucthi'e.,. ,/ dhairi. ':reaction which needs to be taken into account by the Authority. . . (e) FIA therefore submits esth df~~~ " (i) Single Till Model ought to beappliec1'to'A[[ the airports regulated and operated by the Authority regardless of wheth~q (t iS cl:p'f,JbljC'.'U,'t ~rivate airport or works under the PPP model and in spite of the concession agreements as the same is mandated by the statute. (ii) Single Till is in the pubtlc interest and will not hurt the investor's interest and given the economic and aviation growth that is projected for India, Fair Rate of Return (FRoR) alone will be enough to ensure continued investor's interest. (iii) MoCA's view(s) with respect to any issue at best can be considered as that of a Stakeholder and by no means are binding to Authority's exercise of determination of aeronautical tariff as is admitted by MoCA1tselfbefore the IAERAA T. In view of the above, it is submitted without prejUdice that determination of aeronautical tariff on Hybrid Till basis for the First control period would set thetone ~nd precedent for determination of aeronautical tariff in subsequent control periods contrary to the applicable legal framework. Thus, it is submitted. that Authority should discard the option of determination of aeron:aiJticaltatiffon Hybrid Till and101l0w Single Till scrupulously. " Authority's examination of FIA's comments 5.7. With respect to FIA's comments related to the requlatory Till applicable for Vizag airport, it is to be noted that the Authority has decided to adopt Hybrid Till as per the revised gUidelines issued vide its Order No, 14/2016-17 dated 12.01.2017. Order No. 38/2018-19 Page 11 of 73 6. TRAFF IC FORECAST 6.1. As per the Airport Guidelines, the airport operator is required to submit traffic forecasts as part of the MYTP submissions. The Airport Guidelines further provide that the Authority would reserve the right to review such forecast assumptions, methodologies and processes to determine the final forecast to be used for determination of tariffs. The Guidelines further state that the Authority will also use forecast correction mechanism if the actual traffic happens to fall outside the prescribed bands whilst keeping the upper and lower band percentages equal. As part of the tarlff.ceterrnination process, the Authority would require Airport Operators to providep ~9. Q~,JI ~f9r'ttle ~alues of the upper and lower bands, support ic- :i ~ ... -,,'1' / of evidence for the rationale of ·'su'ch bands:and will review the operation of the bands and . 1\ . . .. . -If" determine the final bands for tarift"determination. As per the Guidelines (Clause 6.15.2), any I variation outside these bands would 'be shared equally between the Airport Operator and users. 6.2. 6.3. Financial Year Domestic YoY growth International YoY growth (Domestic) (International) FY 18-19* 2,581,231 - 153,876 - FY 19-20 2,839,355 10.00% 176,957 15.00% FY 20-21 3,123,290 10.00% 203,501 15.00% FY 21-22 - 3,43£>,61.9 10.00% ~ ' ~_ 234,026 15.00% FY 22-23 ' Ii 3,71 0,469 ~ I i: 8.00% , " Ii II 262,109 12.00% . I I . . Table 4: Projected annual ATM traffic as per VlzagAlrport su 'bm.lsslon Financial Year Domestic YoYgrowth International YoY growth (Domestic) (International) , l - FY 18-19* 19,467 - 1,943 - . I FY 19-20 21,219 .. • • I 9 .00%~ 2,176 12.00% FY 20-21 23,129 9.00% 2,438 12.00% FY 21-22 25,211 9.00% 2,730 12.00% FY 22-23 26,976 7.00% 3,003 10.00% "Trettic for FY18-19 has been considered oroponionetely for operetlone! penod startmg from 01.12.2018 Order No. 38/ 2018-19 Page 12 of 73 Authority's Examination 6.4. The analysis of historical trend of passenger traffic and ATM of Vizag Airport are summarized . . in Table 5 and Table 6J respectively. Table 5: 10-year historical passenger traffic data of Vizag Airport Year Domestic YoY Rate International YoY Rate Total Traffic of Growth of Growth (Domestic+lnternational ) 2008-09* 5,98,752 - - - 5,98,752 - 2009-10* 6,31J038 5.39% - 6,31,038 2010-11* 7,11,557 12.76% . " J...... - - 7,11,557 2011-12* 9,57,630 34.58%" <{!.~ ~ ;l '5.3 0~ - 9,58,160 ' ,,:ll : ; ! ~ 'F ,)i., 2012-13* 9J83,056 2.66% 54.552'; NA 10,37,608 .'. I{ .' 2013-14* 9,40,448 -4.33%" 72074\ .,. 32.12% 10,12,522 2014-15* 10,39,485 10.53% 5999B-,; -16.76% 10,99,480 2015-16 16,83,018 61.91% . " 1 ~ 2;1 , e 1 6 102.71% 18,04,635 2016-17 22,60,180 34.29% •. ~-' "".. ;97',849 ' -19.54% 23,58,029 j 2017-18 23,46,574 3.82% ~ . " 1,;338Q5 36.75% 24,80,379 Average of ' I ~I IJ if~ yay Rate of t ' .~' ' . , , .1' Growth 17.96%>; .. .» '.'= ".-f!<.' . .' . NA CAGR-5 "•,"oX :' i' . ~.? : ~liIi ;~k\ ' · ~:i6 . Years 25.68% I { .; 73.0/; iIii 25.11% ., . ~1iJl: w1rr.c:.J)~" · CAGR ."'-J,> ' J.W.J..-].....~~ 10 Years 16.39% . NA NA NA "Histortcsl passenger traffic from FY 2008-Q~FY'·2014-45.Is.sourced. " ' " from AAI Traffic News. Table 6: 10-year historical ATM traffic data of Vizag Airport Year Domestic YoY Rate International YoY Rate Total Traffic of Growth of Growth (Domestic+international) 2008-09* 14,879 - - - 14,879 2009-10* 11,500 -22.71% - - 11,500 2010-11* 11,782 2.45% - - 11,782 2011-12* 15,402 30.72% 86. - 15,488 ., ~ 2012-13* 14,235 -t .58% 894 '.... ,1 , NAI;;r 15,129 2013-14* 9,888 -30.54% 1120 25.2'8% 11,008 2014-15* 10,348 4.65% 1097 ~2.05% 11,445 2015-16 15,078 45.71% 1,661 51.41% 16,739 2016-17 18,129 20.23% - 1,421 -14.45% 19,550 2017-18 17,860 -;.1,48% 1,73p_. • 22.10% 19,595 Average ot yay Rate of Growth 4.61% NA CAGR-5 Years 15.93% 11.56% 15.51% CAGR 10 Years 2.05% NA NA NA *H1stoncalATM traffic of Vlzag Airport from FY 2008-09 FY 2014-15 IS sourced from AAI Traffic News. 6.5. per annum for domestic passenger traffic in FY 2019-20 to FY 2021-22 shown in Table 7 and 10% growth rate per annum in FY 2022-23. The reduction in the growth in FY 2022-23 to 10% is considered, as the Bhogapuram airport is likely to be commissioned by FY 2022-23. Further, on careful examination of international passenger traffic of Vizag Airport, its five-year CAGR is calculated to be 16.73%. Since the airport began international operations in 2011 12 onward, a 10-year CAGR could not be determined. The Authority has decided to accept the growth rate projected for the international passenger, of 15% in FY 2019-20 to FY 2021 22 and 12% in FY 2022-23, as the same appears to be reasonable. Accordingly, the revised ' Y J 1. passenger traffic decided by the Auth'brltY3ls given in Table 7 below. i " ,.?, j ,: Table 7: Projected annual domestic passen'ge'rtraffic as J? ~i' the Authority's Examination '. .5# i ,;. , -,"'" .; l'/I'" ' . :. . ~ ! " . Financial Year Domestic '( YoY groV{th International YoY growth (International) I IiIA ~q,,~~..,s~g ~ " FY 18-19* 26,98,560 ,I , d ;" 153,876 - FY 19-20 31,03,344 A V '}, l ~ 5;00% 176,957 15.00% II FY 20-21 35,68,846 , " , ' -;'/''tl,'J' fUt 5.DO% 203,501 15.00% FY 21-22 41,04,173 i: t'~?J 'i' ''''~ '115,:00% 234,026 15.00% FY 22-23 45,14,590.' 1.(.-\ , ! r; ~~, :~< .\;tO : O O% 262,109 12.00% ,,' >' " .. ..,.., *Trafftc for FY18-19 has been consldered Rmp0iJ:!ona t~Jy" 'pf...operatlonal period startmg from 01.12.2018 J' 6.6. The Authority has examined :lth?9rowt~ in _~TM traffic considered by Vizag Airport in its submission and is of the view\ hat the projections are reasonable. Accordingly, the Authority has decided to accept traffic projections for both domestic and international ATM as submitted by Vizag Airport and furnished in Table 8. Table 8: ATM traffic as estimated by the Authority Financial Year Domestic YoY growth International YoY growth (Domestic) (International) I ~ ,I II '! FY 18-19* ,. 19,467 .' I 1,943 - FY 19-20 21,219 9.00% '2,176 12.00% FY 20-21 23,129 9.00% 2,438 12.00% FY 21-22 25,211 9.00% 2,730 12.00% FY 22-23 26,976 - 7.00% 3,003 10.00% 'Trafftc for FY18-19 has been consiaerea" proportiOnatelyfor operational period startmg from 01.12.2018 Stakeholder comments and the Authority's observations Comments from Government of Andhra Pradesh 6.7. Regarding RAB, GoAP submitted that Order No. 38/2018-19 Page 14 of 73 " :{ . . Hence it is recommended that the proposed investment vide Para 6.17 and 6.18 be kept on hold and taken out of MYTP (Multi Year Tariff Proposal) being avoidable expenses of public money." Comments from FIA 6.8. Regarding the traffic forecast, FIA submitted that "FIA submits that the Authority sought hIstorical passenger & ATM traffic from FY 09 to FY18 and its projections for the first control period from Vizag airport. FIA noted that Authority has done an upward revision in Vizag Airport projections for YoY growth rates for domestic passenger traffic from 10% to 15%,},from FY20 to FY22 and from 8% to 10% in FY23. Further, tile growth rate projection s~S~bmitted by Vizag airport for international passenger traffic and ATMs (domestic +rnt'er'iatiorlal)ih'averbeen accepted by the Authority. FIA further - . ' . \ submits that the Authority has not conducted its 'oWn independent study on traffic projections and broadly relied on the dalaprovided by\Vizag Airport. Further, as per Proposal 1(c) of the CP, Authority has proposed to true up the passenger traffic and ATM for first control period based on actuals. . .~ Passenger Traffic i IJ I !, :( FIA submits that as per Table;iJ: oUM CF:;, , 'hi~torical 5-year and 10-year CAGR for domestic passenger traffic is 25.68% Jma,16.39,% respectively and 5-year CAGR for international passenger traffic is 16. 73%. ~ 1. ~,t . ,,,,;,,kI£2.: '~ .; ~» ' FIA further submits that as perPlita 5:o+o( tHe CP, Authority has considered a 15% growth rate for domestic passenger l r,omtPV:JlOfo rFY22 and 10% for FY23 instead of estimates proposed by Vizag airport and 'has accepted the growth rate of 15% submitted by Vizag airport for international passenger. The Authority has considered growth rate of 15% for domestic/ international passenger has been proposed by Authority basis past 10 year CAGR. However, this is significantly lower that historical 5-year CAGR of 25.68% and 16.39% for domestic and international passengers Hence, FIA submits that Authority consider the 5-year CAGR of 25% and 16% for YoY growth rate projections for domestic & international passenger traffic respectively for the first control oenod. Air traffic movement As per Table 5 of the CP, historical5-year and 10-year CAGR for domestic ATM is 15.93% and 2.05% respectively and 5-year CAGR for international ATM is 11.56%. Further, as per Para 5.6 of the CP, the Authority has considered,a 9% growth rate for domestic ATM from F~/20 to FY22 and 7%'fur FY23an'd considerecl 812% growth rate for international ATM from FY20 to FY22 'and 10% for FY23, thereby -accepting estimates proposed by Vizag airport. However, this is lower then historical 5-year CAGR of 15.93% for domestic ATM. Hence, FIA submits that Authority should consider the 5-year CAGR of 16% YoY growth rate projections for domestic ATM for the first control period. FIA further submits that the Authority has computed the growth rates based only on traffic numbers of past years and has applied the same for projections that too on lower side, however, the Authority has not considered qualitative factors affecting the traffic growth such as the UDAN scheme, double digit growth in passengers across Indian airports in the last 4 years (as per the DGCA domestic traffic reports), and Vizag airport presently being the busiest in Andhra Pradesh. . Without prejudice to the above, FIA submits that since, traffic projections are critical in ascertaining the tariffs and CAGR considered by Authority is significantly lower than past CAGR, the Authority must appoint ~Jl1~1!~~/ consultant to evaluate traffic forecasts. Also, the expert stUdy would be/ {qJdft . " 1.fMI."1 AAl's su bmission on GoAP's and FIA's comments 6.9. AAI in response to GoAP's comments, submitted that 'T he proposed investment vide Para 6.17 and 6.18 are necessary to cater to the needs of growing traffic at the airport. As per the decision of Standing Committee on Green Field airports held on 26.11.2018, Govt. of India has decided to operate Vizag Airport even after the Bhgapuram Airport is thrown open to passenger and cargo traffic." Authority's examination of GoAP's a~c:l ~Flf:~=cq~~~n.fS and AAl's submission on GoAP's and FIA's comments . ,,) ' "". '. 6.10. In response to GoAPs comments, the ' A~hO :i~y notes that construction of Bhogapuram airport is yet to commence, hence it is uncertain as to when that airport will operationalize. Further, since Vizag airport is hi ghl~ cong~st~8, proposed expansions are to be allowed. , II I I : 6.11. In response to FIA's comment,s;.the'!1;'utl1btitY:hClS revised traffic projections submitted by AAI based on historical trends. .~r e\.s ':! ~ ~rf t i o ~~.{ ~f; : , ~ ' A that the 5 years CAGR be adopted to forecast traffic is not accePtJbJe~mai_ §~ there is high volatility in the traffic over the past 5 years and it is difficult to preaict any outcomes on these figures. A more stable methodology would be to base" he ;fo re·Ga~ . b n · , 1 0 years CAGR, and, therefore, the Authority has adopted it. On the suggestion that independent studies be made to estimate traffic forecasts, the Authority is of the view that conducting independent studies into all the building blocks may be more appropriate but it is time consuming and does not serve the purpose. It is also noted by the Authority that some ofthese stu.dies made in the PC1~t~re also way off the mark since the traffic iri.an airport ts dependent on so many; variables that.it is difficult to be precise in such matters. However, in future, wherever studies are made, the Authority will take them into consideration and if necessary, conduct, its own studies to refine the process of estimation of traffic. Decision No.1 Regarding Traffic Forecast 1.a. The Authority has decided to consider passenger traffic projections, given in Table 7. 1.b. The Authority has decided to accept ATM traffic projections submitt ed by Vizag Airport, given [n Table 8. 1.c. Order No. 38/2018-19 Page 16 of 73 7. REGULATORY ASSET BASE (RAB) AND DEPRECIATION Opening RAB - Vizag Airport's submission 7.1. As per clause 5.2.4 of Airport Guidelines, opening RAB is to be calculated by taking into consideration the original cost of fixed asset, accumulated depreciation, accumulated capital receipts of the nature of contributions from stakeholders, adjustment for value of assets excluded from the scope of RAB and adjustment for value of the land excluded from the scope of RAB. . .)\.,l. i . ~ . .. . 7.2. In its submission, Vizag AimDrt has merltioned that depreciation is calculated as per Ml's j , t-v " '1, ' ..'.' " . ' " depreciation rate upto FY 20:15 ~ 16~ depreciatiQr1 "oh RAB and addition to fixed asset FY 2016 ~ , 17 and FY 2017-18 is calculatedas ,per ,80mREmies Act 2013. From FY 2018-19 onwards , '" depreciation is worked out as Ren rates prescribed by the Authority. Half year rate of 1 depreciation is calculated on additions I,to Assets in form 10(a) ,for their first year of l capitalization. I, 1" 7.3. Accordingly, steps: 7.3.1. Gross block as on 01.04.2016h'as 5~ e n co n s i d e r e d as the starting point; " \ , .. 7.3.2. Gross block as on 01.04.2016 has b'een classified into aeronautical, non-aeronautical and common assets; 7.3.3. Further common assets have been bifurcated into aeronautical and non-aeronautical assets; 7.3.4. Determination of gross opening RAB asonOI.04.2016; 7.3.5. Determination of opening RAB aso,n 01.04.2016 by reducing accumulated depreciation upto01 .04.2016; 7.3.6. Additions during FY 2016-17 and FY 2017-18 to Opening RAB as on 01.04.2016; 73.7. Depreciation on opening RAB as on 01.84.2016 and additions to RAB during FY 2016-17 and FY 2017-18; 7.3.8. Determination of opening RAB as on 01.04.2018 after considering additions and depreciation during FY 2016-17 and FY 2017-18; 7.3.9. Additions to opening RAB as on 01.04.2018 during the first control period; 7.3.10. Depreciation on opening RAB as on 01.04.2018 and additions during the first control period; 7.3.11. Order No. 38/2018-19 Page 17 of 73 7.4. Vizag Airport in its submission has classified the opening gross block as on 01.04.2016 into aeronautical, non-aeronautical and common assets as shown in Table 9: Table 9: Gross block of assets as on 01.04.2016 and bifurcation into aeronautical, non aeronautical and common assets as per Vizag Airport's submission (in ~ lakhs) Asset head Aero Non- Common Cargo ANS Total Aero Aprons 1,382.54 - - -- 1,382.54 Terminal buildinq 489 .0 :7,~ : nr~ . 8 . 8 9 8,542.76 - 336.64 9,387.36 Machinery ,/ 52'287 ~ . b . :0 3 > 627 .57 - 1,521.79 2,201.67 Elect installation 2~26QAp ; I :~ ,' .r: - ~~ 615.56 - 0.17 2,878.19 · ~;li \ .",.. Runways taxiway '\'" :7 .4 4 ~ : -:{ - -- 7.44 '. ' . '1" -, . Roads, bridqes & culverts , 21M! r ... - - - - 2.44 Temporary building 79.51['; ' \ " i ~' , -- - 79.51 Residential buildinq ' 1 2~7 5 I'....C ~"tI !.' 23.96 -- 36.70 Operational boundary wall ! ~ 17.13 428.55 4n.41 Il .. / , -- Residential boundary wall 10.94\ 1,.- 69.79 - - 70.73 Other buildings 484 '~A~ " 'l.:.v' .::, - 77.84 5.35 567.63 Computers: End user devices ."12:'(j9 I.':;; """>'17(-: ' ... 18.15 - 0.73 30.97 Software ~ll ; 51;;1 $ .•I ~i< )It j ' iIv - -- 51.15 Computers: Servers and networks '~~\;,C p,; ~ ~~~ J;'j ·· :,,'t ~: ; I.l! 25.27 - - 30.69 Tools & plant 105:04!.I'''"'...... - - - 1,32 106.33 " Plant & equipment: FIDS :; 6g:Se, '.- . ::r.;, :I" - - - 56.86 Furniture-Office (Other than Trolley) -, , "9.32 ' ~' '., \ .! ; • -- - 9.32 Vehicles 22.65 --- - 22.65 Cars/Jeeps 39.82 - -- - 39.82 Office equipment 28.81 - 2.41 - 4.75 35.97 Furniture & fixtures : other than trolley 200.49 - - - 8.66 209.14 Furniture & fixtures : Trolley 53.35 -- -- 53.35 X-ray Baggage System (XIBS) 365.68 - - - - 365.68 CFT & Fire Fiqhtinq Equipment. L 60.34 - " . - - - 60.34 Grand Total .., . ..; 6;196.27 1~.93 . ~ 9 , 92 5 .4lJ .. ..~1;7 . 8 4 1,896.53 18,115.04 • ' ., I j 11 7.5. Opening common assetsother than terminal building have been bifurcated into aeronautical and non-aeronautical basis actual utilization of assets. 7.6. Further, space earmarked for ncn-aerorrautteal activities in terminal bUilding is 6.85% of total terminal b1lilding area, Agcordingly,COnirnon assets relatir.g to terminal building have been , , bifurcated into aeronautical and non-aeronautical in the ratio of 93.15 to 6.85 as given in Table 10. Table 10: Classification of opening common assets into aeronautical and non-aeronautical assets as per Vizag Airport's submission (in ~ lakhs) Asset head Total common Aero Non-Aero Terminal building 8,542:76 7,963.43 579.33 Residential buildinq 23.96 21.78 2.18 Residential boundary wall 69.79 63.45 6.34 Computers: End user devices 18.15 17.05 1.11 Computers: Servers and networks 25.27 23.73 1.54 Machinery 627.57 584.58 42.99 Elect lnstallation . / ' ··· ~"'I 31T;:; ~ """" 615.56 573.33 42.23 Office equipment :, '''--1-•••••,: 4/-l'\. 2.41 2.26 0.15 i Grand Total / ~f I,~ "%~9 2 5 . 48 9,249.61 675.87 I .:. / Order No. 38/2018-19 ;:~ Page 18 of 73 ( t.• I if~ } "~;. \ ,'\' """trq \~ v,'lit 'U q~ . ~~ C'J:J. ...., 0,,1 a: .... 7.7. Depreciation on RAB upto FY 2015-16 has been computed as per MI's depreciation rates as per Vizag Airport's submission. Opening RAB as on 01.04.2016 has been computed by reducing accumulated depreciation upto FY 2015-16 from gross block as on 01.04 .2016 as shown in Table 11. Tab le 11: Opening RAB as on 01.04 .2016 as per Vlzag Airport's submission (in ~ lakhs) Asset head Gross opening Accu mulated Opening RAB RAB as on depreciation as as on ~ ,~ .• ' 0 1 ~ 04 . 20 1 6 ' \ . ' on 31.03.2016 01.0 4.2016 t /' I Jt~ ~'· I " (A.)" : (B) (C) =(A)-( B) :' ' ., ~7 '{ . I, rt" . -a '•. Aprons j ' . '; 1,382.54 1,382.54 - Termin al buildinq "'i, :.Il. '8,452.50 5,001.37 3,451 .13 Machinery It .J Il'. ~ r, 636.86 489.40 147.46 Elect installation d ~ 1~'l'i( !/ 2'835.79 2,537.84 297 .95 ' I' Runways taxiway , !i I \1 . i rr 7.44 7.44 - I f, Roads, bridqes &culverts ~ . L :~ WI (t ;J\ ~ 2.44 2.44 - Temporary building :ili/IJ- ~' %r T ."'~\i~~~;1 9 . 5 1 79.51 - Residential buildinq lll!~ "~ Jfi'''f=.\ . ~ G ~ . 5 3 17.85 16.68 Operational boundary wall ¥Il\ " ', I \~~~.Jj:0:;t . ,:';'"'4:11.41 391.05 20.37 Residential boundary wall ...;:I": u.o:.j;L :.:.,..t!' I 64.39 10.24 54.15 Other buildings "v-r--. . ,~., -s :--.413 4.44 453.29 31.15 Computers: End user devices .( ", ' 4>/( •• '29.14 27.94 1.19 Software 51.15 51.15 - Computers : Servers and networks 29.15 28.24 0.91 Tools & plant 105.01 104.50 0.51 Plant &eculpment FIDS 56.86 46.51 10.35 Furniture-Office (Other than Trolley) 9.32 9.07 0.25 Vehicles 22.65 20.43 2.22 Cars/Jeeps 39.82 35.63 4.19 J ~ ',-. '~ Office-equipment • . "> 31-.07 31.05 0.03 Furniture & fixtures: other-thanttollev ' J j I 200:49 II II . 191.81 8.67 Furniture &fixtures: Trolley I , . 53.35 . , 48 .80 4.54 X-ray Baqqaqe System (XIBS) 365.68 329.86 35.82 CFT & Fire Fighting Equipment. 60.34 60.28 0.06 Grand Total 15,445.88. · 11,358.24 4,087.64 ., . Order No. 38/2018-19 Page 19 of 73 7.9. Depreciation during FY 2016-17 and FY 2017-18 on opening RAB as on 01.04.2016 has been computed as per depreciation rates prescribed under Companies Act, 2013 as shown in Table 12. Table 12: Depreciation during FY 2016-17 and FY 2017-18 on opening RAB as on 01.04.2016 as per Vizag Airport's submission (in f lakhs) Asset head FY 16-17 FY 17-18 Total Aprons - - - Terminal buildinq l ./ m ':l 254.95 254.47 509.42 -, 11, ~ (3'~.\. , Machinery " , .. 39.64 39.54 79.19 ·~f" ' Elect installation ( " ''''~'I ...';fI ,-' ·75i;88 72.98 148.86 .: J;' ~t~';l1 _ Runways taxiway 0' J - - Roads, bridges & culverts t. :~; ,'t.,....:i;-" - - Residential buudino i:t/ '~1 ~ : lJ' } .~:),~ 1.15 1.15 2.30 Temporary boundary wall 'r)~l. ''f. ~ )\)r fl . , i,~ - . Operational boundary wall ~ I \1 I ,i I 3.17 3.17 6.34 Residential boundary wall l ~ V11J. r.' 2.14 2.14 4.28 ?;~l! '< 11\ )\~ ' ..,. . Other buildlnqs ...r I , ( '" 1.57 1.57 3.14 Computers: End user devices W"'r£! :,;;1'1 ~Wcti,S -' 0.54 0.23 0.77 Software ,llI" t ..... },r "'k '.~ , . ·'!~ ' m, - - Computers: Servers and networks ~I: r , '"'=' ; \;'-/:(.II;;XP';{ ,~·,1Ui O . 26 0.26 0.53 Tools & plant 'f'~ "·.T.'i'~,. :'i. 't{Ilfi' *. .ii o 0.11 0.04 0.15 Plant & equipment: FIDS ~ .::.. 1.30 1.21 2.50 -_ ... Furniture-Office (Other than Trolley) ,"'1 \ .( .•,,'; ' Ti ~ 0 . 0 7 0.07 0.13 Vehicles 0.72 0.60 1.31 Cars/Jeeps 1.31 1.26 2.57 Office equipment 0.02 0.01 0.03 Furniture & fixtures : other than trolley 4.34 4.34 8.67 Furniture & fixtures : Trolley 2.17 2.17 4.34 X-ray Baqqaqe System (XIBS) 4.27 4.27 8.53 CFT & Fire Fighting Equipment. 0.02 0.02 0.04 Grand Total 0(," _ .' Ji...... ,393:63 . 389.49 783.12 .- I I -- " I il I Order No. 38/2018-19 Page 20 of 73 7.10. Further, gross additions during FY 201 6-17 and FY 2017-18 to RAB as on 01 .04.2016 as per Vizag Airport's submission have been shown in T8hlp. 13. Table 13: Gross addit ions during FY 16-17 an d FY 17-18 to RAB as on 01.04.2016 as per Vizag Airport's submission (in f lakhs) Asset head Descript io n FY 16-17 FY 17-18 Total Extension of apron for 6 Aprons addltional parking bays 2,088.41 2,088.41 Modular SS Body prefabricated Terminal building E-Toilets t";~im=;), 22.48 22.48 Biometric Apc~~s,c 'i9trq/ I ' •.f ; Systems, E.'Splps}ve ~ ta9~ . . ... '~ , ] i , Machinery Detector, Water 9p olers 1Ahd RO~~ System . ~. ,~" C I .~ <. . 15.06 - 15.06 High mast for 'nCltib(laFflagM~G Electrical installation set, Scissor LifEMO AIUminurn Ladder ,I "1 I · II 35.98 7.10 43.08 Relocation of garb,.ag'e d'u'thpi'ng Residential build ing point • ~~ ~:t';~~ Ii ;lil 1,\. - 16.15 16.15 Operational boundary wall 27 .71 - 27.71 Provision .0f i ~ ~trf.bG~.~ .~~~,~ : ~"j~ Other buildings Construction of aamlnlstratlve office complex -, ~.. - 235 .00 235.00 Computers: End user Laptops, printers'7'UJRSl ,r i ,1 devices 8.39 6.59 14.98 Surge protection device, Tools & plant Raplscan meter 6s 41.90 113.23 155.12 Plant & equipment: FIDS Baggage Trolleys - 22.71 22.71 Furniture-Office (Other Chairs and bookcase than Trolley) - 75.27 75.27 Office equipment Scanners 0.50 1.90 2.40 Furn iture & fixtures: other Furniture For Housing Airport than trolley Systems I;quipment . I , 12)13· - 12.13 X-ray Baggage System X'-BIS 6040 ex X-BTS1 001 OOv l • (XIBS) 168.26 - 168.26 Grand Total ' 309 .92 2,588.83 2,898.75 7.11. Depreciation on gross .additions .to RAB during FY 2016-17 and FY 2017-18 has been computed as per depreciation rates prescribed under Companies Act, 2013 as shown in ' Table 14. Table 14: Depreciation on additions to RAB during FY 16-17 and FY 17-18 as per Vizag Airpo rt's submission (in f lakhs) Asset head Rate (%) FY 16-17 FY 17-18 Total Aprons 3.33 - 34.77 34.77 Terminal building 3.33 - 0.37 0.37 Machinery 6.67 0.50 1.00 1.51 Elect installation 10.00 1.20 2.64 3.84 Residential building ...... ----:...... 3.33 - 0.27 0.27 Operational boundary wall '" \ " ' '.-.: fI ~.j'lJ ~ 10.00 0.46 0.92 1.38 Other buildings /' , 1>.'i'>. , )"~, 3.33 - 3.91 3.91 Computers: End user devices I GlJ!,fJt~ , '~ I\ 33.33 0.70 1.95 2.65 Tools & plant J I .1Jfl~t(r , IJ 6.67 1.40 6.57 7.97 , ;~ ~~~ Order No. 38/2018-19 . (l Q . Page 21 of 73 \~ . ''''rr/ ~ q~~ . ~ , ' ~ ~ " Ijl~ ~ ~~'\ Asset head Rate (%) FY 16-17 FY 17-18 Total Plant & equipment: FIDS 10.00 - 0.76 0.76 Furniture-Office (Other than Trolley) 14.29 - 7.53 7.53 Office equipment 20.00 0.05 0.29 0.34 Furniture & fixtures: other than trolley 14.29 0.61 1.21 1.82 X-ray Baggage System (XIBS) 6.67 5.61 11.22 16.83 Total 10.53 73.42 83.95 7.12. Net additions during FY 2016-17 and FY 2017-18 to RAB as on 01.04.2016 have been computed by reducing deprecia.tion'from (gross additions during FY 2016-17 and FY 2017-18 .'!' ;.-"" . ~;, to RAB as on 01.04.2016 aS5hQW~ 'iri tcibl.€'l ~1§ : '), "" . • ~' , • j Table 15: Net additions to RAB as on 01.04:20,16 during FY 16-17 and FY 17-18 as per Vizag Airport's submission (in ~ lakhs) . O ~ t l! ' "11u, :.~~ ; a} ' > . Gr~ s s Asset head . , , addI itions, Total Total I ' > I J ' depreciation '. ,~"IH'\ j ' .,' 7/J'. Z:>itl. "'; .Ii. . " ,\, during FY 16-17 and FY 17-18 .1\~I1~} .', ~~~, :-~;' . " t.." ~t~r.; . ) L~~\ .~'::'I\~:".P~~h,iJ" , Aprons ' . y . .... :};':2;088A1 34.77 2,053 .64 Terminal building __,,-- ~~, 22A 8 0.37 22.11 Machinery .1': :""'1 ' '- , 1'5.06 1.51 13.56 Elect installation 43.08 3.84 39.24 Residential buildlnq 16.15 0.27 15.88 Operational boundary wall 27.71 1.38 26.33 Other bulldinqs 235.00 3.91 231 .09 Computers: End user devices 14.98 2.65 12.33 Tools & plant 155.12 7.97 147.16 Plant &equipment: FIDS 22..'Z,j 0.76 21.95 Furniture-Office (Other than Trolley), _ , 75~21 7.53 67 .74 I - I ' ; II Office equipment a "'\1 2.40 .1 0.34 2.06 Furniture &fixtures: other than trollev j 12.13 I 1.82 10.31 X-ray Baqqaqe System (XIBS) 168.26 16.83 151.43 Grand Total 2,898.75 83.95 2,814.81 Order No. 38/2018-19 Page 22 of 73 7.13. Opening RAB as on 01.04.2018 as per Vizag Airport's submission has been computed in Table 16. Table 16: Opening RAB as on 01.04.2018 after considering additions and dep reciation respectively during FY 16-17 and FY 17-18 as per Vizag Airport's subm ission (in ~ lakhs) Asset head RAB as on Net additions to Depreciation Opening RAB 01.04.2016 as RAB during FY during FY 16-17 as on per Tab le 11 16-17 and FY and FY 17-18 01.04.2018 (A) 1.7 ~18 as per opening RAB (D) = (A)+ (B) , ~ , j )N I: ' ~Ta l! ~e J§ as on (C) ft> ;; ~ ... " -..,... " o' (~" , • 'J (B) .. 01.04.2016 as ~ : per Table 12 I (C) (~ " ~ . Aprons l,! \ ,I Ill! ~ ? , 0 5 3 . 64 - 2,053.64 Terminal building 3,451.13 L fl, ' 0;.... 22.11 509.42 2,963.81 Machinery 147(46 ;' 1·.·/ ·. 111 ."! , ~)..',h \l '~\. . 1 3 . 56 79.19 81.83 Elect installation 297:95 . .:i: " ." ,~.~·i ;~ /1'39.24 148.86 188.33 Residential buildinq l:l i ~H) 8 ; ' i t\ ;:' ;~j ~ Ii:::.: '11'5.88 2.30 30.26 Operational boundary wall 20i37:', ~~:~ )i~~ 2 6 . 3 3 6.34 40.35 Residential boundary wall 54:f5 "' .~ ...... , ru'" - 4.28 49.87 Other buildings 3 l: 115 ~ ' 1\ ";' ':.1 .. .=-";1"''1'' ;2..31.09 3.14 259.10 " '. , . Computers : End user . devices 1.19 12.33 0.77 12.75 Computers: Servers and networks 0.91 - 0.53 0.38 Tools & plant 0.51 .147.16 0.15 147.52 Plant & equipment: FIDS 10.35 21.95 2.50 29.80 Furniture-Office (Other than Trolley) -. 0.25 67.74 0.13 67.86 ~ .... L.... I .~ Vehicles - ..... 1 2.22 ~ - " 1.31 0.91 .1 _ .s . ~ Cars/Jeeps 11 4.19 .. ' .1 I 2.57 1.62 Office equipment 0:03 • 2 .06 Y' 0.03 2.06 Furniture & fixtures: other than trolley 8.67 10.31 8.67 10.31 Furniture & fixtures: - - Trolley 4.54 '. " - 4 .34 0.20 X-ray Baggage System (XIBS) .. 35:82 1-51.43 . 8.53 178.71 CFT & Fire Fighting Equipment. 0.06 - 0.04 0.02 Grand Total 4,087.64 2,814.81 783.12 6,119 .33 Authority's Examination - Opening RAB 7.14. The Authority after verifying material facts and relying on MI's audited accounts has decided to accept Vizag Airport's submission in relation to opening gross block as on 01.04.2016, J .' accumulated depreciation upto 01.04.2016, additions during FY 2016 -17 and FY 2017 -18 to RAB as on 01.04 .2016 and depreciation on opening RAB as on 01.04.2016 and additions ...".,w. ,__ during FY 2016-17 and FY 2017-18. I ./ .~. ,:::. 1" Order No. 38/2018-19 " ( ) Page 23 of 73 .' 7.15. In regard to capex incurred towards additions to RAB, the Authority has compared the normative capital cost of Terminal Building and Taxiway/Apron, as per the Authority's order in the matter of "Normative ' Approach in Building Block in Economic Regulation of Major Airports" dated06 June 2016 (hereafter referred to as Normative Capital Cost Order) with the actual costs. After accounting for inflation, the Authority has considered a normative cost of INR 100,000 per sq. m. for terminal buildinq and INR 7,200 per sq.m.after excluding earthwork cost for Taxiway/Apron at FY 2017-18 prices. 7.16. Terminal Apron & Particu lars Building Taxiways 5,942.48 3,160.89 10,150.00 52,357 58,546.60 6,037.19 7.17. In the case of terminal building exparislomJ h ~~ u n i t cost of ~58 ,546 per sq.m. appears to be reasonable, and it is therefore decided to accept the costs. 7.18. In the case of additions to Apron, the cost of completion of the project is ~3,160.89 lakhs as per the submission of Vizag Airport. Vizag Airport confirmed that scope of work includes extension of apron for an area of 26,712 sq.m., construction of New link taxiway (N5) with associated shoulders, construction of vehicUlar-lane, shoulders for the old apron, old taxiways N1 and N2, and new VIP road. The surface' area of all the above pavements including the extended apron area is 52,357 sq.m. as shown in Table 17. The cost of construction of the above facilities is ~6,037 .19 per sq.m. which is 28.45% higher than the normative bench mark cost of ~4 , 7 0 0 . 0 0 p e r sq.m. Vizag Airport further confirmed that the reason for higher cost is on account of poor geotechnical subsurface soii existing at Visakhapatnam airfield which require soil improvement techniques l.e. consolidation of soft clay by drivinq perforated vertical drains and imposition of super imposed load for a height of 2.90 meters for a period of six months to achieve desired consolidation and improvement in the geotechnical parameters. Given that high costs have been incurred towards soil stabilization, and further accounting for inflation since 2016, the Authority has decided to accept the cost of Apron and Taxiway as submitted by Vizag Airport. , . , Additigns to RAB during the first control period as per Vizag Alrport's submission 7.19. 7.20. Following izag Airport during the first control period: Order No. 38/2018-19 Page 24 of 73 7.20.1. Linear expansion of Term inal BU ilding- ~57 crores in FY 2019-20 . 7.20.2. Extension of apron for additional 06 number of parking bays- ~ 31 crores which Is incurred in two years- ~21 crores in FY 2017-18 and ~10 crores in FY 2018-19. 7.20.3. Construction of boundary Wall- 0.93 crores in FY 2018-19. 7.20.4. Baggage Trolleys-~0.80 crores in FY 2018-19. 7.21. Additions to RAB during the first control period as per Vizag Airport's submission are given in Table 18: \ . '''" c: ~~ Table 18: Additions to RAB as on 01.04~018 d~ r i ~g th e,first control period as per Vizag Airport 's submissio n (in f lakhs) , . .... tift). l' .( l. " .. ~~ '., , . " , r..·.!l., ,.. Asset head Description . JW ~8- j ' FY 19-20 FY 20-21 FY 21-22 FY 22-23 Total 1ft?) . " it~1 9 'I' , ~ II ! I In Extension of apron for 6 ~ ' ~ Aprons r'pl,), additional parking bays . t,.07ZA8 \. - - - - 1,072.48 I;'", ,?;;~ ," IJ Authority 's Examination - Additions to RAB 7.22. The Authority has noted that Vizag Airport ~suP.m i s s i o n has considered the entire linear lJ expansion of the terminal building equiyalerit ' . ~ lakhs as aeronautical. However, the Authority advises Vizag Airport to~a 5~~~~~~a l activities in the new terminal JiU ~ Order No. 38/2018-19 " Prri~~ ~ ~~ Page 25 of 73 • ,J ';;''11/ 'f'~ ';b ~' \ ~" ~ -, . ~ ~ <:J.I$:\ _>·[J:·.IiJ"'''''' ~.~\'t'. ./' ...... ~ . ;; t,; • .J ' -' . bulldinq area to enable commercial operations at the airport. Accordingly, the Authority has decided to allocate the expansion of the terminal building into aeronautical and non aeronautical in in the ratio of 93.15 to 6.85 , as considered for common assets in Vizag's submission given in paragraph 7.6. This allocation of expansion of terminal building is given in Table 19. Table 19: Asset alloc ation of Terminal Building Expansion during the control period as per the Authority's Examination (in f lakhs) Particulars Ratio (%) fy ~:x,20 FY 20-21 Total 8l" ,., Aeronautical 93.15%/.. ',. \t·~.~">r"{Y5; aO;9 ::S.5 204.93 5,514 6 .85% ~ - c .... • ":-'~'" ' / 3 9 0 ~5 Non-Aeronautical .r...... i" ., . ' ., '" '. ', 15.07 406 Total 100% 'r r' • OJ. '5';7.00:00 220.00 5,920 -: ,.p, . ,,: .~ ~; \ . 7.23. The aeronautical allocation of ter~mal ~ulldll1g expansion IS to be considered for computing RAB. Accordingly, the revised tdtal!,additionsto RAB are given in Table 20. . I ~ U . Table 20: Additions to RAB as on 01.04.2,0.18Jlurin'g:th'e.first control period as per the Authority's examination (in f lakhs) ~(. J I" , I • .(\. , '... ., •.,•...'\ . . , ' ITr Asset head Description Total Extension of apron for 6 Aprons additional parking bays 1,072.48 Terminal Linear expansion of buildlnq Terminal buildinQ 5,309.55 204.93 5,514 Machinery Explosive Trace Detector 10.73 10.73 Replacement of existing Elect signage with LED type installation Signage in terminal bulldinq 430.80 15.00 445.80 Residential CISF residential Qua(ters ~ 1 . 50:00. ' building family accommodation i . 50.00 Temporary Fencing adjacent to CISF I I boundary barracks wall 10.00 10.00 Operational Operational Boundary Wall boundary Around Vpt Handed Over wall Land At Vizag . 94.85 94.85 Residential Construction of boundary I boundary wall at residential colony wall 39.32 39.32 Other Misc. unforeseen works/ buildings minor capital works 20.00 20.00 Tools & Provision of Alarm & fire plant Hydrant system 1.00 1.00 Plant & Baggage Trolleys equipment FIDS 79.16 79.16 Supply, Installation , testing Office and commissioning (SITC) equipment ofSCCTV 396.78 436.89 Grand Tota l 5,721.33 204.93 7,775 Order No. 38/2018-19 Page 26 of 73 7.24. Allocation of such capital expenditure towards linear expansion of terminal building shall be trued up in the next control period based on actual usage in the current control period Stakeholder comments and the Authority's observations Comments from FIA 7.25. Regarding Terminal Building, FIA submitted that "As per analysis average useful life for assets including Opening RAB for Vizag is approximately 10 to 16 years. Further, l1verage useful life considering only additions ranges between 14 to 21 years. ~' : ': ';,.t :. , ' ~ .' c , ' ." . 1;-. FIA submits that as per Para '6:24 0" CI2, depreciation from FY19 onwards has been computed as per rates prescribed dnaet;. ''AERA Order No. 35/2017-18 "In the matter of Determination of Useful life of Airport Assets'" dated 12 January 2018. Further, half yearly rates of depreciation have been corisideted for additions to RAB in the first year of capitalization. For terminal building arla othqr buildings, while Order 35 states useful life as 30 or 60, the useful life consider,bw Viza~ i~ irtfo it and accepted by Authority has been 30 years in the CPo For refere.nce;HIA 'Would like to highlight, life of buildings as 30 years, considered by the Authority, is.hotihaccofdance with Part C of Schedule /I of Companies Act, 2013, which provides usWuhlife Of'building$lraving Reinforced Concrete Cement (RCC) frame structure to be"l@f)ye'ilis::,iNslsUbihitted that there is no mention with respect to the structure of buildings, altHbiJgiJ~iP;?1Jf~hIY 'unlikely that terminal buildings are not built with RCC technology. "Pf=, . Hence, authority has 'taken adopted conservative view with respect to useful life of terminal and other buildings. It is submitted that accordingly, in the interest of consumers, Authority could consider useful life of buildings as 60 years instead of taking a conservative view. Further, FIA 's review of useful life of assets at various international airports like London Heathrow, Sydney airport and Amsterdam Schiphol indicated that terminal buildings have useful life as long as 60 years and aprons have it as long as 99 years. Also, useful life of terminal bUilding for Kanrl'Ur,& Cochin airports.Mtte been considered 60 years by Authority. However a$ Rer the CP, average,dife' ofairpo'rt' assets Bc:Jd[tions between FY17 to FY23 is ranging bet.WefJn 15-20 ,years'diJring the controlp'eriod which primarily comprises of Terminal & other buildings and :Aprons Hence, it is' submitted. that accordingly, in the interest of consumers, Authority could consider useful life of buildings as 60 years instead of taking a conservative view. " 7.26, Regarding Apron Expansion, FIA submitted that "The Authority as per Table 1 of the 9P, mentions apron bay area of 82,986 sq. m., which includes 56,610 sq. m. for 8 parking bays and 26,376 sq. m. for 6 new parking bays completed and commissioned on September 2018. However, as per Para 6.17 of the CP, "Vizag Airport confirmed that scope of work includes extension of apron for an area of 26,712 sq.m., construction of New link taxiway (N5) with associated shoulders, construction of vehicular lane, shoulders for the old apron, old taxiways N1 and N2, and new VIP road. The surface area of all the above pavements including the extended apron area is 52,357 sq.m". Hence, as the areas mentioned in the CP are different, FIA requests that Authority to clarify which area for apron is accurate. " : 7.27, Regarding Asset Allocation Ratio, FIA submitted that building is considered as 93.15% and 6.85% respectively by the Vizag airport. For the opening RAB, the Authority has considered this allocation based on earmarked areas for terminal building and essentially relied on assumptions of Vizag airport. In respect of Authority proposes to use Average RAB as given in Table 27 of the CP for calculation of ARR. Also, with respect to additions, Authority has proposed to allocate the expansion of terminal area into aero and non-aero in ratio of 93.15% to 6.85% . FIA submits that even in the case of terminal area allocation, the Authority has relied on submissions of Vizag Airport. However, FIA understands that entire capex additions during the control period (except terminal expansion mentioned as above) has been considered as Aeronautical by the Authority. Hence, certain additions which could,,have been allocated to non-aero has not been considered by Authority. ' 'j. ~ • I :, , ~ '" FIA submits that given the , ~i;iii~a/;tyojallodatibn ;Of the airport assets between aeronautical and non-aeronautical in sh'Eiredtill appreach, "tHe Authority should carry out allocation of assets on the basis of indeperidehtstudy rafher than on the basis of submissions 6y Vizag airport. . . ', \( ' . 7.28. AAI submitted that- B "It is confirmed that scope of work includes extension of apron for an area of 26, 712 sq.m., construction of New link taxiway (N5) with associated shoulders, construction of vehicular lane, shoulders for the old apron, old taxiways N1 and N2, and new VIP road. The surface area of all the above pavements including the extended apron area is 52,357 sq.m" Authority's examination of FIA's comments and AAl's submission on FIA's comments 7.29. With respectto FINs comments 9n "llseful life Of t~rmlnal building, the Authority refers to AERA Order'No. 35/2017-18 "In the matter of Determination of Useful life of Airport Assets" dated 12.01.2018 , which states that useful life of terminal building may be considered as 30 years or 60 years as evaluated by the airport operator. Accordingly, useful life of terminal building considered by AAI is reasonable. 7.30. With respect to FINs request for clarification regarding Apron area, the Authority sought clarification from AAI and consequently Table 1 was amended to reflect correct Apron area details.. 7.31. With respect to FINs comments on asset allocation ratio, it is clarified by the Authority that additions to RAB submitted by AAI are considered after allocating total proposed capital expenditure into aeronautical: and non-aeronautical. Allocation ratio is based on existing terminal building area allocation. Further, it is to be noted that the Authority is in the process of conducting a study on the subject and will true up the ~~ lI o ca t i o n accordingly in the next control period. /-;;;;;>J,~ 3fTfi'lrg ~ / '-;§' ~ Depreciation on RAB as per Vizag Airport's submission (;~( ~ :~ ~ Order 1\10. 38/ 2018-19 ,'21, Page 28 of 73 \ "0 \ 0.; & ".:t .ft, \{-'1 ,...:p/l/utory r..\\\\:~ .., ...... _- -_. 7.32. Deprecia tion from FY 2018-19 onwards has been computed as per rates prescribed under AERA Order 1\10.35/2017-18 "In the matter of Determination of Useful life of Airport Assets" dated 12.01.2018. Further, half yearly rates of depreciation have been considered for additions to RAB in the first year of capitalization. Table 21: Deprec iation on opening RAB as on 01.04.2018 d uring the fi rs t contro l period as per Vizag Airport's submission (in f lakhs) Asset head Rate FY 18-19 FY 19-20 , FY 20-21 FY 21-22 FY 22-23 Aprons 3.33 % , . ~~, - - - - Terminal building 3.33 % . ' \ j "" 25:3.1d,' ,. ; . ;253.64 253.38 253.04 250.94 Machinery 6.670/0,. ,~i -:" 39.1.7 ~ ~,~·.c ; ;2 J .4 2 7.01 - - Elect installation 10.00 % ~ ,1\- ,97:31 ' ,~ " -:'~ \'47 . 2 9 3.66 ' 0.09 0.04 Residential building 3.33 % ~' '1.15: )' ,.~, 1.15 1.15 0.73 0.73 Operational boundary .J'l;r' r 7 .55~ I wall 10.00 % ~ ,I 3.58 2.89 - - Residential boundary , : ' til ' ) wall 10.00 % I , ~ '6.37. !< 6.37 6.37 6.29 6.25 Other buildings 3.33 % , ,r ..'J'1'(. j .5h 'l, ',.'. 1.57 1.57 1.57 1.57 . . .r:» Computers: End user c'it ;'. 33.33 0/0;; ; '1~r O;30~ . ~ . ' ~n. devices , , ' _ ...' . ' 0.12 - - - Computers: Servers and f" 'j;, ~i) "" , ~. 'i~V networks 16.67 % . , : O : ~'si" -- - - Tools & plant 6.67 % . "r-' T \0,04 ...... ,. 0.04 0.04 0.04 0.04 ~ Plant & equipment: FIDS 10.00 % " I . 11:50' . 1 1.50 1.44 0.53 - Furniture-Office (Other than Trolley) 14.29 % 0.04 0.04 0.03 - - Vehicles 12.50 % 0.60 0.31 -- - Cars/Jeeps 12.50 % 1.10 0.52 - - - Furniture & fixtures: Trolley 33.33 % 0.20 - - - - X-ray Baggage System (XIBS) '''. - 6.67 % ' 4.27 .. 4.27 ,,,, ,_4.27 4.27 1.69 ~, 1 CFT & Fire Fighting ~ I "1 I Equipment. .' 6;67 % 0.02 0.00 - - - Total 415.26 341.82 281.82 266.55 261.25 Table 22: Depreciation on additions to RAB during the first control period as per Vizag Airport's submission (in f lakhs) , Asset he ad Rate FY 18-19 ' FY 19-20 FY 20-21 FY 21-22 FY 22-23 , Aprons 3.33 % 87.40 105.26 105.26 105.26 105.26 Terminal building 3.33 % 0.75 95.65 194.22 197.88 197.88 Machinery 6.67% 1.36 1.72 1.72 1.72 1.72 Elect installation 10.00 % 25 .85 48.14 48.89 48.89 48.89 Residential building 3.33 % 1.37 2.20 2.20 2.20 2.20 Operational boundary wall 10.00 % 7.51 12.26 12.26 12.26 12.26 Residential boundary wall , 10.00 % 1.97 3.93 3.93 3.93 3.93 Other buildlnqs 3.33 % 8.16 8.49 8.49 8.49 8.49 Computers: End user .----z.l'tQ.. devices 33.33 % 4.99. , """, , - - - \<\~ ...u'I ' ;r .v>l ~, Tools & plant 6.67 % 10/3'l:t.~ I"""l[,. 10.41 10.41 10.41 Plant & equipment: FIDS 10.00 % ~ 6. 2:}' 10.19 10.19 ~/ ,~~' 1 0 1 9 . ; / ~ ( . ;' li ,. -: I ;:/\J', . Order 1\10.38/2018-19 ., .,; di )l Page 29 of 73 l7f't,,:f,t ~ \\ ~ ~ . " ~) ~\:'~ . . ~" - ~I$.\ Furniture-Office (Other than Trolley) 14.29 % 10.76 10.76 10.76 10.76 10.76 Vehicles 12.50 % - - - - - Cars/Jeeps 12.50 % - - - - - Office equipment 20.00 % 4.49 48.18 87.86 87.86 87.86 Furniture & fixtures : other than trolley 14.29 % 1.73 1.73 1.73 1.73 1.73 X-ray Baggage System (XIBS) 6.67% 11.22 11.22 11.22 11.22 11.22 Total 184.17 375.14 509.14 512.80 512.80 Table 23: Total depreciation on RAB during the.fi.(St control period as per Vizag Airport's submission (in ~ lakhs) ..., .. . Particulars FY 20-21 FY 21-22 FY 22-23 De reciation on 0 enin RAB 281.82 266.55 261.25 De reciation on additions to RAB 509.14 512.80 512.80 Grand total 790.96 779.35 774.05 Order No. 38/2018-19 Page 30 of 73 Authority's Examination - Depreciation on RAB 7.33. The Authority has noted that depreciation rates considered by Vizag Airport and methodology for computing depreciation are in line with rates and methodology prescribed under AERA Order No. 35/2017-18 "In the matter of Determination of Useful life of Airport Assets" dated 12.01.2018. Accordingly, the Authority has decided to accept Vizag Airport's submission in relation to depreciation. 7.34. As given in paragraph 7.22 , the Authority has decided to allocate the expansion of the terminal building into aeronauticatvantrnon-aeronautical in the same proportion as the existing terminal building as:6iven 'i~ ~p~~·g i:ap n ·'Z .6 . As a result, the aeronautical allocation and its depreciation thereof is': t~ be 6 ~ hS id e r~~ for RAB computation. Accordingly, the I '. • • revised depreciation attributable to aeronautloal.asset of terminal building expansion is given '4, . ' . ) I in Table 24. ' \ . iJ . Table 24: Depreciation of aeronautical asset..ofl.te~rriinal building expansion during the first control period as per the Authority's examination '(tn ~ · I a k li s ) l~. )r!' 1 .. ' \ '" Particulars FY 20-21 FY 21-22 FY 22-23 Depreciation on aeronautical asset of 180.97 184.38 184.38 terminal building expansion Order No. 38/2018-19 Page 31 of 73 7.35. Incorporating the above comput ation, the revised depreci ation on additions to RAB and total depreciation for the first control period of Vizag Airport as per the Authority's examination is given in Table 25 and Table 26 respectively. Table 25: Depreciation on additions to RAB during the first control period as per th e Authority 's examination (in ~ lakhs) Asse t head Rate FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Aprons 3.33% 87.40 105.26 105.26 105.26 105.26 Terminal butldlnq 3.33 % 0.75 89.15 180.97 184.38 184.38 Machinerv 6.67 % ?:1.3.6l , 1.72 1.72 1.72 1.72 Elect installation 10.00 Ofcr: - ;, W25:8 5' I '.fr". l48.14 48.89 48.89 48.89 Residential buildino 3.33 °/cr~ ' " :l.1 .1.37 .'1 ~ .J/,?- .2 .20 2.20 2.20 2.20 ..I'. ;X~ ) Operational boundary \ ' ~\ .,', '~ wall 10.00 % ' . eI. 7.51 • 12.26 12.26 12.26 12.26 Residential boundary , ~ ).' ,\.~ " J9i' If}' .. ~~ll f wall 10.00 % 1.97 '(. 3.93 3.93 3.93 3.93 Other buildings 3.33 % Y ~ 8 . 1 6' ,I 8.49 8.49 8.49 8.49 Computers: End user f, ~(.rt rt, devices 33.33 % 'rj ·'hA.99\ t\\, 4.99 -- - Tools & plant 6.67 %.\1 .... . f1 Q ! 3 8 ~; ' :n ,10.41 10.41 10.41 10.41 Plant & equipment: FIDS 10.00 %] r.. "f'\:- 6 .:2 .3, . ;. ,1.1.1110.19 10.19 10.19 10.19 Furniture-Office (Other ( I '~ .'" :);,.~\;>-""'--J.. ' J.Uur !;Y:= ,I: than Trolley) 14.29 % lO.76·' r)V '.. 10.76 10.76 10.76 10.76 Vehicles 12.50 % q~I , .., ~ - - - - Cars/Jeeps 12.50 % - - - - - Office equipment 20.00 % 4.49 48.18 87.86 87.86 87.86 Furniture & fixtures: other than trolley 14.29 % 1.73 1.73 1.73 1.73 1.73 X-ray Baggage System (XIBS) 6.67% 11.22 11.22 11.22 11.22 11.22 Total , 184.17 368.63 495.89 499.30 499.30 Table 26: Total depreciation'on RAB during the -first control.p~riod ·as per the Authority's examination (in ~ lakhs)' " . . , . , I! I . " . Particulars FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Depreciation on opening RAB 415 .26 1 ·~ 34 .1 . 8 2 281.82 266 .55 261.25 Depreciation on additions to RAB 184.1.7. 368.63 . 495.89 499.30 499 .30 Grand total . 599.43 , 710.45 . , 777.71 765.85 760.55 I Average RAB as per Vizag Airport's submission 7.36. RAB during the control period as per Vizag Airport has been summarized in the Table 27: Table 27: Average RAB as per Vizag Airport's submission (in ~ lakhs) Particulars FY 16-17 FY 17-18 FY 18-19 FY 19-20 ' FY 20-21 FY 21-22 FY 22-23 o enin RAB 4,087.64 3,993.40 6,119.33 7,368.34 12,763.16 12,192.21 11,412 .85 Additions to RAB 309 .92 2,588.83 1,848.45 220 .00 (404.16) (462.91) (779.35) (774.05) 3,993.40 6,119 .33 11,412 .85 10,638.80 . Order No. 38/2018-19 Page 32 of 73 I Average RAB 1 4,040.52 I 5,056.36 1 6,743.84 1 10,065.75 1 12,477.69 1 11,802.53 I 11,025.83 I Authority's Examination - Average RAB 7.37. The Authority has decided to allocate the expansion of the terminal building into aeronautical and non-aeronautical in the same proportion as the exlstlnq terminal building as given in paragraph 7.6. Accordingly, the aeronautical asset of terminal building expansion and its depreciation thereof, is considered in computing average RAB, Thus, the revised RAB during the control period as per the Authority after considering the above decisions has been t ·\.II ~ : " summarized in the Table 28. .'" ;':;.', r/. j '~I , " ', ',.. ~ " Tab le 28: Revised RAB as per the Autho'ritv's Examihation(ln 1t lakhs) ~~"A " -:l--w ' i ;ll);;F~ ' Particulars FY 16-17 FY 20-2. 1 FY 21-22 FY 22-23 Opening RAB 4,087.64 12,379.21 11,806.44 11,040.59 Additions to 309.92 2,588.83 tI1,f3 48.4.5/ ,1} 5,72 1.33 204.93 - J - RAB IJ~ ,,'Ii Ii, J It Disposals - - - Depreciation (404.16) (462.91)i" i . (9 ~ 9, .4 ;3 H ~~: ( 7i ~ 0.46) (777.70) (765.85) (760,55) Closing RAB 3,993.40 11,806.44 11,040.59 10,280.04 Average RAB 4,040.52 12,092.83 11,423.52 10,660.32 Decision No.2 Regarding RAB fR, 2.a. The Authority has considered allocations of the expanded area of the terminal bUilding into aeronautical and non-aeronautical assets in the ratio of 93.15 to 6.85. Accordingly, the Authority has considered additions to RAB during the first control period as given in Table 20, depreciation of additions to revised RAB as given in Table 25 and total depreciation as given in Table 26. 2.b. The Authority has considered 'a'verage RAB as g!ve ~ in Table 28 for calculation ofARR 2.c. The Authority has decided to true up avera ge RAB including the asset allo cation based on the study to.be conducted by tlie Authority for the nextControl Period; , " . . Order No. 38/2018-19 Page 33 of 73 8. FAIR RATE OF RETURN (FRoR) 8.1. Vizag Airport in its submission has stated that the Airport has no debt. Therefore, interest rate computation is not applicable. 8.2. Vizag Airport has considered Fair Rate of Return (FRoR) equivalent to the cost of equity (Ke) at 14% p.a. This is in line with the decision taken by the Authority for other AAI airports such as in Chennai, Kolkata, Guwahati and Lucknow for the first Control Period . Authority's Examination 8.3. The Authority has recognized ,'tni3tViZGlgAirp~orfsU~apital structure may not be regarded as an "' ~ '\ '" ".' , ' ,::."< efficient one in that it dcesn't.optlrnlze tlte cost of funds from a regulatory perspective. The ~ \ ' .' ) Authority desires that the FRoR a ll ()W~d JO Yi z~ g Airport should come down over a period of time by optimizing capital gearir1" Yg : Tfie., Au,thority may also consider a normative capital structure to determine the FRoR a}'t a l lai~ r o/ate. It may not be reasonable to expect Vizag , J I Airport to contract large amounts 'ofdebfbvei :a, short period of time. -: '; ',t) 1 . f":\:. 8.4. Th~ AU~hority has ~oted tha~~s.~ 1 ~: ; S!~ 1~,.~~. 1rructed in respect of .the 'Fair Rate of Return Estimation for AAI' In July 2011qt:\esttm1=lJl#da JJgure of 14.96% as Fair Rate of Return for AAI . 'm,,' owned airports. The Authority. not~s .that it has considered FRoR at 14% for Chennai and Kolkata airport in the first conl1" period ~o n S i d~ r i n g the recommendations of another study done by National Institute of Public Finance and Policy (NIPFP). Based on the decision taken for Chennai and Kolkata airport, the Authority considered FRoR at 14% for all AAI Airports for whom tariff has been determined subsequently. 8.5. Based on the above, the Authority has decided to consider FRoR at the rate of 14% for Vizag Airport for the first Control 'Period, as.submitted by VizagAirport. " Stakeholder comments and the AiJthority's observations Comments from Government ofAndhra Pradesh 8.6. Government of Andhra I?radesh submitted that "Please refer Para No. 7.2 regarding Fair rate of Return (FRoR). The FRoR appears to be unjustified as the comparison is either with a Metro or a State Capital Airport with higher passenger density, wherein Vizag is not a full-fledged airport. It is only a Civil Enclave which is presently handling 2 MPPA and the main infrastructure, i.e. runway belongs to Indian Navy. (Page 28, Para-Repair and Maintenance). Hence, FRoR may be reduced 0 a lower number." Authority's examination of GoAP's comments I • 8.7. In response to GoAP 's comments on FRoR, the Authority points out that FRoR is not discriminating since returns on MI's financing of investments in airports is done at CHQ level hence, segregating the investments airport-~~Q!..Possible. Accordingly, the Authority has taken a consistent view for all AAI a ~~~~s}? 1 ffi! . ,~ rdingly decided to maintain the same FRoR across AAI airports. /: IJ'R,"t.. S;\ :': ~,,'J' (l\ ( " I , ,'," ~ Order No. 38/2018-19 .~~;, ~ 1~~' Page 34 of73 .'; ~'~J ' ~ I- , " iv ~ <)J, ' ;,!!/ 'i,!;: f,;" " "'f! . Cs~ ' ~~!IOry l\u\,,~:9 Decision No.3 Regarding FRoR 3.a. The Authority has decided to consider the FRoR at 14% for Vizag Airport fo r th e first Control Period. 3.b. The Authority will undertake a study to determine FRoR for major AAI airports given the low debt structure of AAI as a whole. Order No. 38/2018-19 Page 35 of 73 9. OPERATION AND MAINTENANCE EXPENDITURE 9.1. Vizag Airport's submiss ion on details and assumptions of operation and maintenance expenditure proposed to be incurred during the first control period are provided in Table 29. Table 29: Assumptions made by Vizag Airport for each Item of Operation and Maintenance Expenditure Item Assumption • Vizag Airport has assumed 40% allocation of staff as non-executive and remaining 60% as ex;c.u,tjye staff in its submission. . • Based on the.above.:allocation, 'Y'izag Airport has proposed an increase of 37.16% in F.j{ 20~ 8~ 1?f 'f6Fwage revision for non-executive staff and 7% increase in FY 2018 -1.9 .fo ~ wag(revision for executive staff. • Thereafter a y e ~ r:: Repair & • ~ 562.62 lakhs incurred for runway costs have been charged off, not Maintenance reimbursed by the State Government and the runway was handed to the Indian Navy in FY 2017-18. This amount has not been previously accounted for. This amount has be.eLl-io.c.luded in the O&M cost for FY 2017-18. • ~ 9.98 lakhs AMC 'f~;:: ; :"~fU' el -Circuit Television (SCCTV), ~ 1.64 AMC for Computet , AM ...~ b I auncernent (PA) System & Electronic rivatebranchex an e Y:;1:e' i 6l1l ' ed in FY 2017-18 Order No. 38/2018-19 Item Assumption • Vizag Airport received ~1 .92 crores from insurance co mpany towards the claim of damage caused by Hud Hud Cyclone for which repair and maintenance expenditure was incurred in FY 2015-16. This amount of claim , received in FY 2017-18 which ought to be set off against the expenditure incurred in FY 2015-16 is shown as prior period income and not considered in tariff ro osal. • Electricity and Water charges have been estimated to remain unchanged for most of the control period. However, an increase of 20% has been est imated Electricity & Water for FY 20-2021 due to the expansion of the Terminal Building. . ' , ~ • Power charqes incluCles,electricity charges and fuel for diesel generators. • Power char ·~~ .~r~e~mu~te.d : O'~ s'~Q on estimated electricit units consumed. Consumption of Expenses pertai~ 'i ~g toGons ~ ~ptio ~ of Stores & Spares has been estimated to Stores & Spares increase b 10% ear-on- ' e8'r ttirou hout the control eriod. Other outflows comprises offacilitation charges pertaining to PSF and UDF . It is assumed that these fGh argeSI'J'fjll 'grow year-on-year at thecombined traffic Other Outflows growth rate of domestiGjand'!dte r:nafidnal passengers. - 9.2. Below Table 30 summarizes\theoperatidri;8Jid maintenance expenditure': , , " , ';0 ,T, ' ,; . , ,jiiJf ' \:"; l Particulars FY 16-17 FY 17-18T , W'fif!1 91' ~ I',FY 19-20 FY 20-21 FY 21-22 FY 22-23 Payroll costs 759.35 820 .28 979.48 1,050 .33 1,123 .85 1,202.52 1,286 .70 Repair and 539.19 1,056 .84 543.64 598 .00 687.70 756.47 832.12 maintenance Consumption of stores and 4.50 6.53 7.19 7.90 8.69 9.56 10.52 spares Electricity and ,- 5 ~t3.14 ' ]I 579.27 579:271 579.27 e95.12 695.12 695.12 water charqes T '! Admin and other !:. ' 'f. 615.04 697.20 902,51 939 .18 978.13 1,019 .52 expenses 810. 4' Other Outflows (Collection 48.29 52.60 58.01 63 .97 70.55 77.83 84.25 , charges on PSF and UDF) Total 2,534.51 ,3,212.72 2,977.98 3,201.99 ' 3,525.10 3,719.63 3,928.24 Authority's Examination 9.3. The Authority has noted that Other outflows comprising of collection charges on PSF and UDF, are expected to grow year-on-year at a rate equivalent to combined traffic growth rate of domestic and international passengers. Accordingly, revised operation and maintenance , expenditure as per the Authority after considering revised 'collection charges based on revised passenger traffic growth rate is presented in Table 31 below. Particulars FY 16-17 FY 20-21 FY 21-22 FY 22-23 Pa roll costs 759.35 1,123 .85 1,202.52 1,286 .70 Order No. 38/2018-19 Page 37 of 73 Particulars FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 . FY 21-22 FY 22-23 Repair and 539.19 1,056 .84 543.64 598.00 687.70 756.4 7 832 .12 maintenance Consumption of 4.50 6.53 7.19 7.90 8.69 9.56 10.52 stores and spares Electricity and 568.14 579 .27 579.27 579.27 695 .12 695 .12 695.12 water charqe s Adm in and other 615.04 697.20 810.41 902 .51 939.18 978.13 1,019 .52 expenses Other Outflows 40.29 52.60 ' ~'o;~l 69.57 80.00 92.00 101.30 (Collection . . j, ---:...... 1• • charges on PSF r.~. ) ....). .. ~~ " i ,..... •' -": l I / ) . ";:'~j and UDF) ~~ ._ ',<_ .'",,:'.'. Total 2,534.51 3 , 2 1 2. 72 ~ \~';; 2 , 9 8 0 ;47\ k'3';207.59 3534.55 3,733.81 3,945 .29 I , ;,:J '"i"t', 9.4. Period. "Please refer Para 8.1, Table 28- Repair & Maintenance. The costs shown against the runway was never supposed to be reimbursed by the State Govt. as mentioned. Hence the amount may not be included in Operation and Maintenance expenditure for FY 2017-18 . The runway being the property of Indian Navy, this matter may be resolved between AAI and Indian Navy, VishakhapfJtnam being a civil encieve. " Comments from FIA 9.6. FIA submitted that "Operating expenditure is one otihe mejor. component for determining ARR (61% of ARR) , . hence, the Authority should have evaluated these expenses in detail rather than accepting projections and basis provided by Vizag Airport on an "as is" basis. As per clause 5.4.2 .of AERA 'Guidelines, while .revieWing forecast of operating expenditure the Authority has to assess (a) baseline opereilon end'meintenence expenditure based on review of actual expenditure indicated in last audited accounts and check for underlying factors impacting variance over the preceding year; and (b) efficiency improvement with respect to such costs based on review of factors such as trends in operating costs, productivity improvements, cost drivers as may be identified, and other factors as maybe considered appropriate. FIA submits ,that the approach of the Authority for reviewing the operating expenditure is not in line with provision of AERA Guidelines, and accordingly it is submitted that in order to assess efficient operating expenditure the Authority should have conducted independent analysis. Further, FIA submits that the Authority ought to have scrutinized the expenses in detail instead of leaVing it for true up in , th %~ ontrol period. It is submitted, that airport has already completed a significant perp~ ions, and hence benchmarking the costs would not be difficult for the Aut tty. There / is submitted that rather than truing up, a price cap should be mandate by th'itjy/hO ' or each of the operating expenditures depending on the evaluat/oQ f pas~t:.1ffl~ lfs, c rivers, productivity movements, future ( . '~I!l ~ '\ '¢."r, Order No. 38/2018-19 \ '" ""i,,,, ' Page 38 of 73 \'\'~ ~ •!to '1-<1: ' 9' . ";:. ~,~ -, ' ~~I l 'II:, l) '"' 'iJlory f\lltM t" ...... _ ~ :l _ .. expansions otherwise Vizag Airport would not make palpable efforts to contain the costs. This would lead to additional burden on tile passengers for the next control period. FlA further submits that the Gross operating expenditure, allocation ratio and basis of allocation has not been mentioned by Authority in the CP, which suggests very casual approach by Authority. Hence, FIA cannot review the trend of the incre ase of gross operating expenditure and allocation methodology. FIA submits that the allocation of the operating expenditure between Aeronautical and Non-Aeronautical categories is critical under Shared Till approach, Authority ought to confirm the allocation ratio and gross operating expenditure being projected prior to the release of Order, for stakeholder review. " 9.7. "The cost of upgradation of airfie!dWas :,to .be borne by AAI, MOD and GoAP, The amount due from GoAP were receivee 'a {) p.erMOD. However, the amount due from MOD was charged as the amount could not be r(i) dovim~d from MOD for long. ' ~ . . ~ ' ~ 1 \ !( , Authority's examination of GoAP's am:l~ FIA 's "comments and AAl's submission on GoAP's and ' j , ( , 1 FIA's comments ,0 .' 3'.~.: J (~ ",\~i . t . i l~ . \t~.., .)~~j)J ..'. ~', ,' . . .. 9.8. In response to GoAP's comments>J,reg;51f E!Il;1QTunway cost, the Authority clarifies that runway cost pertains to cost of upgrqdat[Qn ~ oJ ~irfield which was to be reimbursed by Ministry of ' 0 ' , I j Defence (MoD). Since, such cost could not b'e recovered by'MoD, it has been debited in profit and loss account of FY 2017-18. 9.9. In response to FIA's comments regarding operation and maintenance expenditure, the Authority has carefully examined the underlying assumptions for projecting operation and maintenance expenditure. The Authority has examined audited financial statements for FY 2016-17 andFY 2017-18 to verify correct[1essaf:allocatedcosts, and escalation in expense are based on analysis of past contracts 'and agreements; Further, it is to be noted that the -. • ., ' '.' i ' , Authority is in the process of conducting a study on the subject and will true up accordingly in the next control period. Decision No. 4 Regarding Operation and Maintenance expenditure 4.a. The Authority has conside red operation and mainten ance expenditure projections given in Table 31. 4.b. The Authority has decided to true up the operation and maintenance expenditure of the first Control Period based on the actual expenditure at the time of determination of tariff for the next Control Period. Order No. 38/2018-19 Page 39 of 73 10. REVENUE FROM NON-AERONAUTICAL SERVICES 10.1. Vizag Airport has submitted the forecasts of various components of non-aeronautical revenues as well as the assumptions underlying the forecast. Tab le 32: Assumptions made by Vizag Airport for each item of Non -Aeronautical Revenues Item Assumption Trading Concessions • Trading Concessions consist of Restaurant/Snack Bars, T.R Stalls, and Hoarding & Display. • Revenue from Restaurant/Snack Bars, and T.R Stalls is estimated to increase by f.1 0%. y~~ ~\() 6~Y ~ 9 r ~ P per agreement in FY 2018-19 and FY 2019-20. Because;of the expa nsion of the Terminal Building, revenue from these streams are ~e s t i m atecrto~ i n ,Rent & Services • Rent & Serv i 9~s , 'cdmpr;is~ \ otr:ev~nues generated from Land Leases along with Resideniia raMCl ,\N6ii .;-R~sidE;ntial Buildings. - '- . :;~ ~ - l';'l ~ ~ ,' , :.. ' .,~( • Land Leases are"ptqjettetl to ~g!OW by 7.5% year-on-year throughout the control period" -, 1 ~ • Income from Residential Buildings are estimated to remain unchanged until FY 2022 and FY 2023, when ~ 1 lakh has been added each year until the end of the control period. • Revenue from Non-Residential Building is computed to grow by 10% year on-year in FY 2018-19 and FY 2019-20 . Because of the expansion of the Terminal Building, revenue from these streams are estimated to increase by 15% in FY2020-21 and thereafter at 10% for the remainin control eriod. Miscellaneous • Major reven\Je sources Include Duty,Freej$hops, Car Rentals, Car Parking and Admission Tickets. Revenue'frorn these sources is projected to increase by 1b% year-on-year as per the agreement, apart from an estimated growth of 15% during FY 2021 because of the Terminal Building Expansion. • ~8Iakh~ excess billing for FY 2016 ... 17 -Duty Free Shop reversed in 2017-18. • OtherMiscellaneous income is assumed to be ~2 lakhs in FY201'8-19, which is projected to grow at 5% year ...on-year throughout the control period. Vizag Airport has assumed this as the minimum amount, excluding non-recurring Earnest Money Deposit (ENlD)1 Security Deposit (SD)/Liquidity Damages (LD) of more than three years from miscellaneous income in FY 2017-18. ~148 .81 lakhs EMD/SD/LD of more than three years in miscellaneous income in 2015-16. 10.2. Revenue from Non-Aeronautical Services for the first control period submitted by Vizag Airport are as shown in Table 33. Table 33: Revenue from non-aeronautical services proj ected for the first control period (in f lakhs) Particulars FY 16-17 FY 17-18 FY 20-21 FY 21-22 FY 22-23 Restaurant/ 49.60 152.20 167.42 184.16 Snack Bars T.R Stall 143.10 121.f5? 168.58 185.44 203.98 Order No. 38/2018-19 Page 40 of 73 Particulars FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Hoarding & 123.65 231.87 360.00 360.00 414.00 414.00 414.00 'Display Land Leases 42.47 8.19 8.81 9.47 10.18 10.94 11.76 Building 0.36 3.40 0.36 0.36 0.36 1.36 2.36 (Residential) Building (Non 121.64 116.20 127.83 140.61 161.70 177.87 195.66 Residential) Duty Free Shops 48.12 58.65 64.51 70.97 81.61 89.77 98.75 Car Rentals 48.08 48.77 53.64 59.01 ' Car Parking 176.16 192.14 ' "",, ;2,1h:3'5 . { .• 232.49 267.36 294.10 323.51 Admission 78.78 122.17 134.39 147.83 Tickets Other Miscellaneous 37.46 2.21 2.32 2.43 -lncome Sale of Scrap/Fixed 0.48 Asset Total 869.90 1,429.13 1,531.24 1,643.44 '1 ' \. ~ ; i '~~j/"''':~ I , ~ ,I ' ,,~' , ". ".,r Authority's Examination ~ : (, ",-i~)1;~JJ ,,' -. · *(, t~ I" , '::i':, x ,'",1 " Ll,.J4i;. 10.3. Based on discussions with Vizag Airport and .Authorlty's examination, revised assumptions q -,' ?"a for revenue from non-aeronautic ~1 serJicesis given in Table 34: Table 34: Revised assumptions for Non-Aeronautical Revenues as per the Authority's Examination (in ~ lakhs) Item Assumption Land leases • The land lease revenue for FY 2017-18 have been corrected to the audited arnotiht.of ~55.93 lakhs. - • Further,Jand lease revenue 6n27.83 lakhslfrom oil companies and Ground Handling Servicesj which was lncluded .undernon-aero revenues has been deducted since it is Aeronautical Revenue . Thus, 'land lease revenue towards non-aero is revised to ~28.10 lakhs in FY 2017-18. • The' revenue from land lease is considered uniform from FY 2018-19 to FY 2022-23, in accordance with AAl 'sleUer NO.AV.21012/58/2016-LM/710 dated 04.12.2017, pertaining to "Review of Revision in Base Rates of Land [ease Rental/Licence Fee Rates w.e.f. 01.04 .2017 to 31.03.2022 at AAI Airports". Building (residential) • Rent from residential building in FY 2017-18 included ~2.81 lakhs because of unauthorized occupancy. This has been excluded from FY 2018-19 onward . • The proceeds from residential building is assumed to grow at 5% YoY during the control period. Table 35: Revenue from non-aeronautical services as per the Authority'S Examination (in ~ lakhs) Particulars FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Restaurant! Snack Bars 49.60 109.38 152.'20 167.42 184.16 T.R Stall 143.10 121.15 168.58 185.44 203.98 Hoarding & , Dis la 123.65 231.87 ;. . 414.00 414.00 414.00 Order No. 38/2018-19 Page 41 of 73 Land Leases 14.64 28.10 28.10 28.10 28.10 28.10 28.10 Building (Residential) 0.36 3.40 0.61 0.65 0.68 0.71 0.75 Building (Non- Residential) 121.64 116.20 127.83 140.61 . 161.70 177.87 195.66 Duty Free Shops 48.12 58.65 64.51 70 .97 81.61 89.77 98.75 Car Rentals 48 .08 35.05 38.55 42.41 48 .77 53.64 59.01 Car Parking 176.16 192.14 211.35 232.49 267.36 294.10 323.51 Admission Tickets 78.78 87.80 96.58 106.24 122.17 134.39 147.83 Other Miscellaneous , Income 37.46 47.64 ~:~"~.2 . 0 0 . 2.10 2.21 2.32 2.43 : Sale of (" . /\~~~;<~' .. ., ~ . ' f~ Scrap/Fixed Asset 0.48 19..23. , } >. (~.,." - - - - 1 Total 842 .07 1,050:60' ''I) 1 '1 ~ ~~ 11;: I .~ 1,262.48 1,447.36 1,547.75 1,658.16 :~i?~ .. ~~:' Stakeholder comments and the Authonty!sobs.ervatlpns (/ Comments from FIA J7'l' 1;) I /,1 t I.{ < 10.4. FIA submitted the following reg'ardi n~J~ev'enue .from Non-Aeronautical Services ~1 \ ,"<1 "As per proposal 5(a) of thel¢p, :tlje~1AlithQtitYtfhas proposed to consider Non Aeronautical Revenues as per table below an'd fd tr:uej'lJj!fthe non-aero revenue in second control period based on actual revenue of first contm/ Pf?rioc!.:.Further, FIA submits that with regard to the projected non-aero revenue froin FY.1·9 toFY'2.3 the Authority had accepted all the key non aero revenues (Hoarding & Display, Car parking, T. R stall, Non-residential building lease, Restaurants & admission tickets) as projected by Vizag Airport except Residential bUilding leases, where downward revision has been effected. Hence, the Authority has accepted most of the non-aeronautical revenues submitted by Vizag airport and has not evaluated the basis/assumptions for growth rates considered by the Vizag airport. Further, FIA submits that increase in non-aeronautical revenue is function of increase in terminal building area, ,passenger traffic growth, inflationary increase and real increase in contract rates. De$pite all't t7ese factors ~ncreasing . dlJringthe cpntrol period, on examination of the non-qeronciutical revenue projected for the first cdritrol period by Authority, it was noted by FIA that a cotiservetive approach has been taken by the Authority. Further, as per table given above, FIA states that the Authority has considered a 10% increase in FY20, 15% Jncrease in FY21 qn.d 10% increase in FY22 & FY23 in the first control period in 7 non-aeronautical revenue streams .(namely Car parking, T.R stall, Non residential building lease, Restaurants; admission tickets, duty free shops and car rentals) contributing c. 70% 'of total non-eeroneuttcei revenue. Hence, it is submitted that only 5% incremental growth is considered on account of terminal expansion in FY21. In case of Hoarding & Display, which is the largest revenue stream, it is submitted that only increase of 15% is considered in FY21 and no increase thereafter. Hence, on overall basis, 7% increase is considered in FY20, 15% in FY21 and 7% in FY22 and FY23, However, FIA submits that it was noted that the non-aeronautical revenues increased by 25% in FY18, which was in line with 5-year CAGR of passenger traffic growth, hence, it may be seen that the Authority has taken a very conservative approach. Further, as per Table 1 of the CP, the area of integrated terminal building is expected to increase by 9,250 sq. m. oil account of linear expansion. This represents a 42% increase in the terminal building area. FIA submits that the Authority has considered 15% increase in non-aero revenue in FY21, which is just.fiO/p jncremental growth over past years. , .' .,.1 '3111,*;;; FIA submits that Vizag airport'being '!.e ~ sf; , ort in Andhra Pradesh and per Table 4 of the CP had registered hfstor.£al 5f$~ of approximately 25% for domestic passengers and 25% grofNth I in non~~~ re in FY18, the Authority should have Order No. 38/2018-19 \r ..~~~~ Page 42 of 73 \ "f , "f1JoI ~ • (!~ . ,~ \ ~(' (';,' ". ,tlJ?" l '~~tory p.,\\\~Q\~'1-.'\ ...... _-_ ._./ considered a higher growth rate for the non-aeronautical revenues in the control period. The non-aeronautical revenue per passenger was analyzed for each year of the first control period and a decreasing trend was noted in the same, which clearly indicated that the Authority has taken lower growth rate projections for non-aero revenue. Further, as per clause 5.6.1 of the AERA Guidelines, the Authority's review of fcrec ast of revenues from services other than aeronautical services may include scrutiny of bottom-up projections of such revenues prepared by the Airport Operator, benchmarking of revenue levels, commissioning experts to consider where opportunities for such revenues are under exploited, together with the review of other forecasts for operation and maintenance expenditure, traffic and capital investment plans that have implications for such activities. However, review of the CP indicate,c/,:thf;l.t for the purpose of determining Non-Aeronautical Revenue, the Authority, rath.e( t~.a (/ ' eV{3luatinQ.non-aeronautical revenue in detail as per AERA Guidelines to cons(et!(jrthei:impaa( pJ1}7f(f1.tionary increase and real increase while projecting these Non-Aero :revenue, ..f7as fJlimargy relied on ad-hoc growth rate and basis provided by Vizag Airport. . FIA submits that the Authority/o.. re ~consid ~r rgrowth rates for non-aero revenues so as to keep them in line with the groWth i(J ~pa S'sl~ n fJe rS and terminal expansion. Further, Authority has not commented on the rea/ 'increas ~, ;inflationary increase, terminal area based increase and passenger traffic based in~~~~,~e ifoi)he growth rates proposed for the first control period. Since, each of them~ :atr.e.9t l th~ \(rJ!?,(I~aeronautical revenues, it is submitted that Authority re-evaluate the gro4~tftr~!e:s;r ' H~~ ~ a r~nautical revenue basis a consultant study. Without prejudice to the abo i}~j, iri),casfjlJ ;ii.ah city of time for the purpose of issuance of the order, it is submitted that AuthOritjFt!i:considfH 25% YoY growth in non-aero revenue during the control period." :J , . ", ~ . Authority's examination of FIA's comments 10.5. In response to FIA's comments on non-aeronautical revenues the Authority notes that growth in non-aero revenues is as per Agreements. Further, revenues in FY 2018-19 are based on amounts appearing in novated contracts during FY 2017-18 . As per the estimates, there is a doubling of the non-aero' revenues over the seven years "and this seems reasonable . Besides, Lease Rentals .collected from Ground Handling; Cargo and Fuel Throughput, that were being classified' as non-aero revenues, are bein"g treated as Aeronautical Revenue . This may not have substantial impact on tariff and also the same will be trued up in the next Control Period. Decision No.5 Regarding Non Aeronautical Revenues 5.a. The Authority has decided to consider the Non Aeronautical Revenues as given in Table 35 for determination of aeronautical tariffs for th e first control period. 5.b. The Authority has decide d to true-up the Non Aeronautical Revenues of the first Control Period based on actuals at the time of determination of tariff for the next Control Period. Order No. 38/2018-19 Page 43 of 73 11. TAXATION 11.1. Clause 5.5.1 and Clause 5.5.2 of the Airport Guidelines state that: "Taxation represents payments by the Airport Operator in respect of corporate tax on income from ' assets/ amenities/ facilities/ services taken into consideration for determination ofAggregate Revenue Requirement." "The Authority shall review forecast for corporate tax calculation with a view to ascertain inter alia the appropriateness of the allocation and the calculations thereof." . t~ ~;t'! .. 11.2. As per the Airport GUidelin~,s ~ n ~hlnj~f~s~;-R ~ ym,~ n t s , penalty; fines and other such penal levies associated with cor~rate -tax ; Jha!l ¥not b~)aken into consideration as expenditure or • ~ ~ f cost. .. 11.3. Vizag Airport in the tariff proPo ~ ~l ras calpuhjlted income tax based on rates of depreciation as per Income Tax Act. \ 'I . . . . J . '" 11.4. Tax liability during the first contrOl P ~ t i O d b n ~ i d e re d by Vizag Airport is provided in Table 36. , Tabl e 36: Tax liability as per Vizag Airp~h ;s ' ~Ubrt1i Ssi c;rt hn t' lakhs) \1i/rC <\~ . li l"xi ; ~r,A lJ ' c., • • .l~~~-:~ · Particulars FY16-17 FY 17~1 ~ 'lp { '1'8-f 9 FY 19-20 FY 20-21 FY 21-22 FY 22-23 1- ';'::. ";• .:r rr:'...... "·,.., , Aeronautical revenues '." -, < " .' fAl 2,843.88 2,942.06 4,485.28 5,927.13 6,534.21 7,204.30 7,795 .61 Less: Operating ·expenses (i) 2,534.51 3,212.72 ·2,977.98 3,201.99 3,525.10 3,719.63 3,928.24 EBIOTA [B] ={A] -m 309.37 (270.65) 1,507.30 2,725.14 3,009.10 3,484.66 3,867.37 Less: Book Depreciation [ii] 404.16. ~ 462.91 599.43 716.96 790.96 779.35 774.05 I.....;:, ___ PBT " - ·[CI = [B] - [iiI .11 (~4.79) : (733.56) 907.87 t 2,008.18J 2,218.15 2,705.31 3,093.31 .., Less: Tax depreciation . . for the year [iii] 441.47 786.81 808.26 1,132.17 1,312.31 1,172.52 1,038.77 Add: Book depreciation for the year llvl 404.16. r 462;91 599.43 716.96 790.96 779.35 774.05 ·Taxable Income • I I [0] = [C] - [iii] + [iv] (132.10) (1,057.46) 699 .04 1,592.97 1,696.79 2,312.14 2,828.60 Less : Carried forward , 1 of losses lvl ------Taxable Income under norm al tax provisions [E] = [0] -[v] - - 699 .04 1,592.97 1,696.79 2,312.14 2,828.60 Tax rate to be used [vi] 34.61% 34.61% 34.94% 34.94% 34.94% 34.94% 34.94% Tax liability as per norm al tax prov isions [E] .. [vi] - - 244.27 556 .65 592.93 807.96 988.43 Order No. 38/2018-19 Page 44 of73 Authority's Examination 11.5. Vizag Airport in its submission has computed tax on aeronautical profits on tax rate of 34.61% p.a. in FY 2016-17 and FY 2017-18, and at 34.94% p.a. for the first control period from FY2018·19 to FY2022-23. 11.6. The Authority has decided to carry forward and set off losses from previous years in computing the tax liability of Vizag Airport during the first control period. 11.7. Based on the Authority's decision, ta ~li.ability has been recomputed as given in Table 37: .,~ .'T'" ' . ... " Table 37: Tax liability as per the Author'tY~~)E~a rriJh atl"o.1J (in f lakhs) ' c. " . ~ . , 'A: '.-;", ' . J / '" ~ ( I !¢,,~ Particulars FY 16-17 FY" 17-1~8 ; ' "FY:~ 8 ~1 ~~ , FY 19-20 FY 20-21 FY 21-22 FY 22-23 I) ; ~ Aeronautical ~(\: ' revenues as per '/ . r Table 54 [A] 2,871.71 2,969.89 . 13,868.80 5,550.45 6,361.29 7,292.14 8,016.35 Less: Operating I • ~/j~ II):: \~~ expenses as per ,1J; ; * ',;1 \ Table 30 (i) 2534 .51 3212 .'7Q ~ .~f.298n:47 · . 3207 .59 3534.55 3733.81 3945.29 EBIOTA 411l1"(,;~ 'r.1. .',oJ'.' l)t. "', \.~ ' "~ , : , ' .. ~ -' > ' . /,' ~ [8] =[A] -[i] 337.20 -2~,82 ; ·...J a 8 8 ~ 3~ , "W' 2342.87 2826.74 3558.32 4071.06 . -" " Less: Book I l'll'U ._,c_ ' :.) Depreciation fiil 404.16 462.,9,1 ,.( , _ 599043·: 710.46 777.70 765.85 760.55 PBT ~. , -, -" •'4 \"' " "1 \ \ [C] = [B] - [ii] -66.96 -705.73 288.90 1632.41 2049.03 2792.47 3310.51 Less: Tax depreciation for the year as per Table 28 [iii] 441.47 786.81 808.26 1,132.17 1,312.31 1,172.52 1,038 .77 Add: Book depreciation for the 1- year [iv] 404.16 I ~ '462.91 59.9.43.l ·7 j O.46 777.70 765.85 760.55 Taxable Income r 11 ,I • [0] = [C] -[iii] + [iv] -104,27 -1029.63.' 80.0.7 1210.6 ~ · 1514.42 2385.80 3032.29 Less: Carried .. forward of tax losses fv] - . - . 80.0 7 1,053.83 - - - Taxable Income I under normal tax provisions tE] = [0] -[v] -- - 156.86 1,514.42 2,385.80 3,032. 29 Tax rate to be used fvi] 34.61% 34.61% 34.94% 34.94% 34.94% 34.94% 34.94% Tax liability as per normal tax provis ions tE] .. [vi] -- - 54.Bj.. · -~2 a. 20 833.70 1,059.60 " \\ " . ~ 1 '\:.'/: :_ ' '''"" Stakeholder comments and the Authority's observations Comments from FIA Order No. 38/2018-19 Page 45 of 73 . : periods prior to FY17 (if any) should be considered in the first control period rather than leaving it for true up in the second control period." AAI's submission on FIA's comments 11.9. AAI submitted that ~'A ERA has shifted the control period from F.Y.2018-19 to F.Y 2022-23. The carry forward of losses is applicable during the control period and not prior period. " Authority 's examination of FIA's comments and AAl's submission on FIA's com ments 11 .1O.ln response to FINs comments the Au(thprjty has decided that carry forward of losses prior to . ' < FY 2016-17 shall not be consi#~r~Qff~r !RegU'rposes of tariff determination since Vizag was r; )-, ' ,. '~ -1" . ) declared a major airport w~,e .J. [ 0 r,O~2()1'6 an9l fhe Authority has jurisdiction only when an • 'I I '? airport is designated as a major ai'rpQr( . '. ' Decision No.6 6.a. 6.b. Order No. 38/2018-19 Page 46 of 73 12. QUALITY OF SERVICE 12.1. Airport Service Quality (ASQ) ratings are carried out by Airports Council International (ACI) on 34 parameters on quarterly basis. 12.2. As per the submission of Vizag Airport, ACI has categorized it in "2 to 5 Million" category of Airport Size, based on passenger traffic . 12.3. The ASQ ratings of Vizag Airport for 2017-18, as submitted by Vizag Airport is given in Table 38. , '" '7' 2018 4.04 4.15 4.17 4.36 3.97 4.44 4.17 4.09 4.32 12.4. 12.5. The Authority also noted that the ASQ ratings for years 2017 and 2018 of Vizag Airport are less than the target rating of 4.80 agreed upon in the Memorandum of Understanding (MoU) signed between the Ministry of Civil Aviation and AAI. 12.6. The Authority has also noted that the quality of service of Vizag Airport has improved in year 2018 as compared to year 2017, as.qiven in Table 38. The Authority expects the ASQ rating of Vizag Airpbrt to improve further with the commissioning of the expansion of the terminal building during thefirst Control Period as this will ease out the present congestion . Stakeholder comments and the Authority's observations Comments from FIA 12.7. FIA submits that "As per Memorandum of Understanding (MoU) signed between the Ministry of Civil Aviation and AAI, the target ASQ rating of 4.80 was agreed upon in relation to Vizag Airport. As per Proposal 7(i) of the CP, "Since the ASQ ratings of Vizag Airport have been below the target rating of 4. 80, the Authority advises AAI to make all out efforts to improve the Service Quality at Vizag Airport.,The Authority is of the view thal it will examine ASQ ratings while truing up in the next control period and if by then Vizag Airport is unable to achieve the said target, the Authority will consider imposing penalty on Vizag Airport as appropriate ." However, as per para 6.14.2 & 6.14.3 of AERA guidelines, in the event that the Airport Operator(s) performance falls below such benchmark in a quarter, appropriate percentage rebate shall be applicable for such default. FIA submits that as the ASQ ;;arqg;;(iofi,' 1-.& Q2) of Vizag Airport have not met the target rating of 4.80 as agreed p.¢fP:n;tthe;i/7e tltiJprity should impose suitable penalty on Vizag ~- r ~g;~r.l)4~I 'd'" l > , f.: nlw l,,~ Order No. 38/2018-19 ' ~~ hit : Page47of73 F(f~I 'irJf • a<) , 1f.;;k;".I"I Ir} ~ au, ' . lID " . \~. : , ' "' ' .\,7,1 \ ' ~i !, 'f'./ \" ~o~~ . .-...... --." Airport in terms of the AERA Guidelines in the present control period. and not leave such exercise of review in the next control period." AAI's submission on FIA's comments 12.8. AAI submitted that "ASQ of Vishakhapatnam airport is quite high comparing with ASQ benchmark of 3.7.') as proposed by AERA. ASQ rating of 4.8 is as per MOU of AAI with MaCA is based on average of twenty airports. The target is not for the individual airports to achieve." Authority's examination of FIA's commen t~~an fJ Afl's ls~bm lss ion on FIA's c omments r,.. , I ~ ~ • 12.9. Since the ASQ ratings Of \Yi~ag )~irport have ~~ e e n below the target rating of 4.80, the Authority advises AAI to m a ke a ll ~ ~ u t ~ffortS ·to improve the Service Quality at Vizag Airport. , ~ I ' .. The Authority is of the view th ~~'itwill ,e~la01i n.~ASQ ratings while truing up in the next control period and if by then Vizag Air'poh. i ~um:l b I T to achieve the said target, the Authority will consider imposing penalty on Viza :' ~~i pprt ~ \a p p ro p r i a te . Decision No.7 Regarding quality ofserii ice :;',iiF .' !:'I .'h~ l(t-b> ~ &;/ 1i' v. J;i' . 1V 7.a. Since the ASQ ratings bf , V.I ~Cl9 · .~ irport' h av e been below the target rating of 4.80, the Authority advises.~AI to make all out efforts to improve the Service Quality at Vizag Airport. The Authorit~ ~H i e~ a m i n e ASQ ratings while truing up in the next control period and if by then Vizag Airport is unable to achieve the target set for it, the Authority will consider imposing penalty on Vizag Airport. Order No. 38/2018-19 Page 48 of 73 13. PRIOR PERIOD SHORTFALL 13.1. As explained in paragraph 4.2, the Authority shall consider ARR of the first two years i.e. FY 2016-17 and FY 2017-18. ARR shall be compared with actual aeronautical revenues during such period. Any shortfall or surplus from these two years shall be considered as true-up for the current control period. 13.2. FY 2017-18 Tota l 4,074.31 7,317.67 2,942.06 5,790.88 1,132.24 1,526.79 1..14 1,290.76 1,803.51 13.4. After careful examination, the Authority has decided to consider land lease rentals from fuel farm operators and ground handling operations as revenue from aeronautical services. Revised aeronautical revenues durinQ FY 2016-17 and FY ?01,7-18 is shown in the Table 40 below: Table 40: Revised aeronautical revenues for FY 2016~17and 'FY 2017-18 as per the Authority's examination (in f lakhs) Particulars , -: FY 2016-17 FY 2017-18 Total parking & housing charges - 1.53 3.65 Fuel Throuqhput charqes 98.90 84.71 Ground handling charges 119.60 161.95 CUTE Charqes 214.21 219.16 UDF 1,508.96 1,502.01 PSF (excludlno UDF charoes) 900.68 970.58 Land leases (fuel farm & ground handling) 27.83 27.83 Total Aeronautical Revenues 2,871.71 2,969.89 13.5. Revised prior period shortfall after considering revised aeronautical revenues is given in Table, 41 below: Table 41: Revised prior period shortfa ll of FY 2016-17 and FY 2017-18 as per the Authority's examination (in f lakhs) FY 2017-18 Tota l 4,068.33 7,320.05 2,969.89 5,841.60 Order No. 38/2018-19 Page 49 of 73 Previous Shortfall [3] =[1]-[2] 380.01 1,098.44 1,478.45 Compound Factor at 14% p.a. as on 31.03.2019 [4] 1.30 1.14 PV of compounded shortfall [5] =[3] *[4] 494.04 1,252.67 1,746.71 Decision No.8 Regardina prior period shortfall 8.a. The Auth ority has decided to consid er the revised aeronautical revenues for FY 2016-17 and FY 2017-18 as given in Table 40 and acc ordingly consider shortfall as given in Table 41 for truing up in the current Control Period. . ' '' . - •• 'I,. ~ · ': :A j/ ...... ". t.. c., ,r • r . "~ . Order No. 38/2018-19 Page 50 of73 14. AGGREGATE REVENUE REQUIREMENT AND SHORTFALL COMPUTATION 14.1. The ARR computation as submitted by Vizag Airport for the first control period is shown in Table 42: Table 42: ARR computation as per Vizag Airport for the first control period (in ~ lakhs) Particulars FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Total Average RAB [1] 6,743.84 10,065.75 12,477.69 11,802.53 11,025.83 FRoR [2] 14.00% 14.00% 14.00% 14.00% 14.00% Return on Average RAB ,5/, H!'" C [3] = r /",~ . 1..' . ;~ 409.21_~ . ~, ,,,~· [11 * [2] 944.14 (, . j\ 1·I • -. , ·, .n,t,4J;l.88 1,652.35 1,543.62 Add: Depreciation [4] 599.43 ~ 1 '0 ~ 716 ~96 ; Ir,:.;;l~O ~ 96 779.35 774.05 Add : Operating expenses ,;: • ''fI :~\' (" [51 2,977.98 b 3;;20j.1.99" 1 . ~ \f~3 ,525.10 3,719.63 3,928.24 Add: Taxation [6] 244.27 ~f > 5 56 . 6 5V I ~ f" 1"'592.93 807.96 988.43 Less: 30% of Non Aeronautical revenues [71 (349.07) ~ ~ 3 7\ .I ~ ii' Ij lJ428.74) (459.37) (493.03) ARR [8] = l iP~ ~ ( ,'~I i, j I ~ ~~ :: 4,416.75 , ~ ~ , 5 1 ;! ;703 f : \· 6.j ~ 2 7 .13 6,499.93 6,741.30 29,396.84 [3] + [4] + [5] + [61 - [71 f .j . ' '' .iiI: "- 'lc ,~j , ~" ;" •. )"'." J"UI!. 14.2. Shortfall computation for FYJi ~,0:~ ~ :; ~9 ;t ~..c" F.X4 ;~22-23 submitted by Vizaq Airport IS qrven In Table 43: " . ., Table 43: Shortfall computation for FY 18-19 to FY 22-23 as per the submission of Vizag Airport (in ~ lakhs) Particulars FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Total ARR 4,416.75 5,511.73 6,227.13 6,499 .93 6,741.30 29,396.84 Discount Factor 1.00 0.88 0.77 0.67 0.59 .4,416.75;; , 4,834 .85 4,791 .'57 4,387.,26 3,991.39 22,421.83 PV ARR [A] . ; I' " 6 ~534 .21 Aeronautical revenues . -. '4,485.28. . " '., I 5,921.13 ; i:}7,204.30 7,795 .61 31,946.52 Discount Factor 1.00 . 0.88 0.77 0.67 0.59 PV Aeronautical revenues [8] 4,485.28 .5. ,199.24 5,027.86 4,862 .69 4,615 .62 24,190.70 ~ (Sh.ortfall)/ Surplus of l" - the current control period • [B]-[A] 68.53 364.38 236 .29 - 475.43 624.23 1,768.86 Order No. 38/2018-19 Page 51 of 73 Authority's Examination 14.3. After considering Authority's decisions pertaining to buildinq blocks of RAB in prior chapters of its consultation paper, revised ARR as per the Authority is given in Table 44 : Table 44: ARR computation as per the Authority for the first control period (in il' lakhs) Particulars FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Total Average RAB [1] as per Table 28 6.743.84 9.873.78 12.092.83 11,423.52 10.660.32 FRoR [2] as per Decision NO.3 14.00% 14,00%, 14.00% 14.00% 14.00% Return on Average RAB . r : . N :: i ~. ' ,li1 1 ) '- ~~ :' [3] = J. . ' z .;; »;»: a ~: ' .. : • .· 1" [1] * [21 944 .14:: t -. 1.3,82.33" I ij, 1,093.00 1,599.29 1,492.44 ~ "1.."1," r : ' fJ :.t\. ' Add: Depreciation [4] as '( per Table 28 599.43 t;~·<:!.':7 1 0.46\ '1~ ' 7}7.70 765.85 760.55 Add : Operating expenses ~ ,'1' . ~~~~~ :\ 1 1 ~ j'l ' [51 Table 30 2,980.47 3,,207.59 11 ,3,534 .55 3,733.81 3.945.29 Add: Taxation [6] as per ',' R,iI, li,l i( Table 37 - ~ r54t8 1A r\ r , 529 .20 833 .70 1,059.60 Less: 30% of Non - Iff,. ,{¢.:n-,. "i Aeronautical'revenues [7] I "' !~~ ' ,.j '. as per Table 35 354.93 j!t~.. 31~ ;f;[~. 11(: '. A~4 .2 1 464.32 497.45 ARR [8] = I ": .(~ ' [3] + [4] + [5] + [6] - [7] 4,169.11 \ ~~~~~~~ . 6,100.24 6,468.33 6,760.44 28,474.56 ~ ~n ~. ~m::? . 14.4. Revised shortfall computation. - as perlo the AuthOrity for FY 2018-19 to FY 2022-23 Without considering revenues from UDF is given in Table 45 : Table 45: Shortfall computation for the first control period as per the Authority's examination (in il' lakhs) Particulars FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Total . . ARR as per Table 44 '. 4.1.69;111' 4;976.44 6.100.24 ' • ...6.468.33 6,760.44 28,474.56 , ' ' I 'I Aeronautical revenues ,... , - I i .. JI (excludinq UDF) as per Table 52 1,288.36 630.00 702 .77 784 .84 851.30 Discount Factor at 14% p.a. 1,00 0.88 0.77 0,67 0.59 PVARR .4 ,170.60 . 4 ,365.30 4,693.94 4,365,94 4,002.72 21,598.51 PV Aeronautical revenues ~ " (excludinq UDF) 1,469.62 552.63 540.76 529.74 504 .04 3,596.80 Difference between PV of I Aero revenues (excl uding UDF) and PV of ARR -18,001 .71 Stakeholder comments and the Authority's observations Comments from FIA 14.5. FIA submitted that "As per Para 6.1 of Chapter 11/ of the AERA Guidelines, 'T he Authority shall determine Aggregate Revenue Requirement as specified in Clause 4.3 and the yield per passenger (Yj, to be specified in the Multi Year Tariff Org,er:.for:.Jf:I..,e Control Period as specified ". Accordingly, FIA submits that the Authority ha.$~~:'\dt!}!!;;mi,rJ,~'.J1Ot only ARR but also the yield per passenger for the control period. I~'?V . . ,?"?~\ /f~ ~f: . ~~. \ ... ( ' ~ Ih \ · ~\ ; '. , . ~, . ~{II I .J~"f ' ~ Order No. 38/2018-19 ?? Page 52 of 73 t3 .'~' ...'); _ o <' {J ~ lKq lr ~ '-un, -s ~ AAl's submission on FIA 's comments 14.6. AAI subm itted that "The Yield perpax has been computed and submitted by AAI to AERA in the MYTP." 14.7. Decision No.9 Regarding ARR 9.a. The Authority has d ¢· Cjd l(~.J() o:c9,p ~id ~r the ARR as provided in Table 44 for •. (~, .: .. ','; ~ /1\, g ';", 'r I, . . determlnatien of aeronautlcaHarlffSJor the flrst Control Period. . .., 9.b. The Authority has de~i.d.eCl to ; t ru~ 'u:p ' ;a ll the building blocks of ARR of the first Control Period based on actuals at the time of determination of tairff for the next Control Period. Order No. 38/2018-19 Page 53 of 73 15. TRUE-UP 15.1. Total shortfall for the first control period as per Vlzag Airport is given in Table 4(:). Table 46: Computation of total shortfall for the first control period as per the submission of Vizag Ai rport (in ~ lakhs] 15.4. Revised aeronautical revenues from UDF is shown in Table 48. Table 48: Revised aeronautical revenues from UDF as per the Authority (in ~ lakhs): Particulars FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Total Aeronautical Revenues from UDF as per Table 53 ~ ~ -Foll 2,399· .71. . 4,920.45 5,6.$8:52 ' i I 6,507.30 7,165.05 26,651.03 Discount Rate at 14% p.a. I . 1.00 · 0.88 0.77 I, I 0.67 0.59 PV of revenues from UDF 2,400.57 Ii 4,316.19 4,354.05 If,392.24 · 4,242.28 19,705.33 15.5. Revised total shortfall (after considering UDF) is given in table below in Table 49. "Table 49: Revised total shortfall (after considering UDF) asperthe Authority (in ~ lakhs) , , ~ - t Revised total (shortfalh/surnlus (beforeconslderino UDF') as per Table 47 (19,748.42) PV of UDF as per Table 48 - 19,705.33 Revised net total (shortfall)! surplus (43.09) Order No. 38/2018-19 Page 54 of73 16. REVENUE FROM AERONAUTICAL SERVICES 16.1. As per section 2(a) of the AERA Act, aeronautical services include services for Landing, Housing or Parking, Ground handling services, services for Cargo facility, and services for supplying fuel to the aircraft at an airport. 16.2. Vizag Airport in its submission has bifurcated revenues for FY 2018-19 into two periods, 01.04.2018 to 31.08.2018 constituting five months and 01.09.2018 to 31.03 .2019 constituting seven months. Aeronautical revenues for the first five months is calculated at the previous rates of FY 2017-18 and escalated rates ~have been assumed for the next seven months as .r I;..., ;..,.:l. '# applicable . J.. 1~)I\ ~_ r, " , . ' . . • I" ' 16.3. Vizag Airport's submission in ~~ j at i o n .Jo : re~e r:lU ~lf ro m aeronautical services is discussed in Table 50. " Table 50: As sumptions made by Vizag Ai rp'0rt fo ~ each item of Aeron autical Revenues .. II I I j 1/ Item t.,It,] {t\l~ "\Assumption Housing & Parking Because of increa$~ :irfaverage \h~.using and parking charges and aircraft Charges movement, these,llqh :~rg~S '~f~ ,;p,fOPCP~~d to in~rease by 114% from the existing charges w.e.f. 01,..99.?g{1 ~':Wr,~~ ;:g3{:~019. An Increase of 4% thereafter on YoY basis from 2019-20 (onW~raS1is i'propbsed . PSF-Domestic & PSF(Facilitation) charges, of~77-charged presently for both Domestic and International International pass~ r:rQer; is W,ithi:lra.WI). UDF- Domestic & UDF collected from domestic passenger is proposed to be increased from ~150 International to ~355 per pax from FY 2018-19 (w.e.f. 01/09/2018). No UDF is charged at present in respect of international passenger. It is proposed to charge ~355 per pax in respect of international passenger from FY 2018-19 (w.e.f. 01/09/2018) No increase in 'UPF is proposed for the.subsequent Years. Fuel throughput ,10%.inerease is proposed for FY 2018 ~19 w.e;f. ·O.1.09.2018. No increase is Charges 'proposed fOr subsequent financial years. ' ,., Ground Handling Charges for ground handling services are given for FY2017-18; these charges Services are assumed to grow year-on-year at the rate equivalent to the combined growth rate of ATM trafflc. CUTE Charges CUTE charges are giveri for FY 2017-1~; these charges are assumed to grow year-on-year at .the rate equival ent to the ,growth rate of total passenger traffic. " - I 16.4. The projected revenue from Aeronautical Services for Vizag Airport has been provided in Table 51. Table 51: Projected revenue from aeronautical services as furnished by Vizag Airport for first control period (in f lakhs) Particulars FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Parking & housing charqes 1.53 3.65 2.71 2:04 2.32 2.63 2.94 Fuel Throughput charges 103.84 84.71 97.96 111.25 121.58 132.87 142.56 Ground handling ~ ;~ ! charqes 119.60 .tE ~\ . 6" 6, 193.37 211.31 230.93 247.77 1~,~i6 CUTE Charges 214.21 / . " 24'hp"l;: \ 266.52 293.95 324.25 351.01 UDF 1,508.96 { t~ >I. 2 .01 · ~ ~i; 3f5 2 0 . 3'Q ,15,353.95 5,905 .05 6,513.62 7.051 .32 r, t:.: h f Order No. 38/2018-19 ~ Page 55 of 73 . ~ f... I...... l.~~ h, ;;;m\ (;' ~>: 11"= ~ is',, o \"'11 '~/· - . Particulars FY 16-17 FY 17-18 FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 PSF 900.68 970.58 44 5.59 - - - - Landing Charges ------Total 2,848.82 2,942.06 4,485 .28 5,927.13 6,534.21 7,204.30 7,795.61 Authority's Examination - Aeronautical Revenues 16.5. 16.6. 16.7. Table 52: Projected revenue from aeronautical services excluding UDF as per the Authority (in ~ lakhs) Particulars FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Total Total parking & 4.75 9.70 11.03 12.53 13.99 housing charges i .~ Fuel Throughput ~ --94.10.1-- ' 111.'25 . " -~ 121:58: -;t3 ~ : 87 142.56 , 11 charqes I . I Ground handling 176196 193.37 211 .31 . 230.93 · .· 247.77 charges CUTE Charges 250.30 287.85 331.02 380.68 419 .16 PSF I ~ 915.16 - - - I ~ -- Land leases (fuel farm operators & ground handling operations) 27.83 27.83 27.83 27.83 27.83 Aeronautical revenue (excluding UDF) .1,469.09 630.00 702.77 784.84 851.30 4,438.01 16.8. Revenue froin UDF shall be computed at ~300 per passenger for both domestic and international passengers to bridge the total revised shortfall as discussed in para 15.3._ Accordingly, revised revenue from~l;;JDr-a &..per the Authority is shown in Table 53. ,,-,-<' ~ ~\I\~ ; u: lili" • . ~~~. , q~ ' , ~" ~ ~ ~ ~ v '~'6 it '5 ~.s Order No. 38/ 2018-19 -<'0 Page 56 of 73 ~ A . '. 'J' .....'. ''{'(';"'l"'J ". .: .:.' : ~;: . ~-~;:>' Table 53: Aeronautical revenues from UDF as per the Authority's examination Particulars FY 2018-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Total Total passenger traffic 28,52 ,436 32,80,301 37,72,346 43,38 ,198 47,76,699 departing and arriving (international and domestic) UDF per pax (in ~) 300 300 300 300 300 Aeronautical Revenue from UDF (in ~ lakhs) 2,399.71 4,920.45 5,658.52 6,507.30 7,165.05 26,651.03. II I~ 16.9. Total aeronautical revenues iocll!dlll9 UPF as'per the Authority is given in Table 54. Ie> ' ~, .. .:.; I } ' . ... : ~, ., ' " , I £: Tab le 54' Total Aeronautical Reve n ues ~ofNiz a g Airport (luring the first control period as per the Autho rity's examination (In f lakhs) '\f,i :/~" .. ~ . . Particulars FY 16-17 FY17-1'~; I ~\FY; 1 lh19~l Vf:y19-20 ' FY 20-21 FY 21-22 FY 22-23 . jci~\l II Total parking & Ai 1 iilt! i' housing charges 1.53 3.65 " j!~ 4\7$ , 9.70 11.03 12.53 13.99 , Fuel Throughput ';'1/ ; {~ "~:~~ . la ' . charqes 98.90 84 . ,7.' ~I ',Y , ·' hr- 9 4 . ~ O . ~~\ 111.25 121.58 132.87 142.56 Ground handling ~~~?: '~1~~i(;G2J;~ charges 119.60 161.9G"·'.@i+J i7;6,96:, ~Jf 1 9 3 . 3 7 211.31 230.93 247.77 CUTE Charges 214.21 219 .16 .250,36 .. 287.85 331.02 380.68 419 .16 PSF ;:1 1 .., ,c1 ·.rf'" '\I 900.68 970.58 915.16 - - - - Land leases (fuel farm operators & ground handling operations) 27.83 27.83 27.83 27.83 27.83 27.83 27.83 UDF 1,508.96 1,502.01 2,399.71 4,920.45 5,658.52 6,507 .30 7,165 .05 Total 2,.tJ71 ,11 2,96!h89 3,868.80 ~f 5 , 550 . 45 6,361.29 7,292.14 8,016.35 ~ .. ,. " l : ,ff - Stakeholder comments and the Authority'sobseritations' Comments from Government ofAndhra Pradesh 16.10.Government of Andhra Pradesh.submitted that "Information as mentioned in Para 16.1, Notes-1f, regarding rate oftax (VAT) on ATF < 5% is incorrect as Govt. ofAndhra Predesn has already reduced VAT on ATF to 1% since 2014 vide G.O.MS.No.4, dated:22/06/2015. Accordingly, night parking charges may be amended." Comments from FIA 16.11.FIA submitted that "The existing rates for parking and housing have been derived based on 114% increase from existing rates as mentioned in'Table 48 of the CP, however the existing rates have not been mentioned in the Cp. Further, 'as per "Charges for airport services (major / non major airports) effective from 1 April 2017" as issued by Airports Authority of India, it was noted that existing tariff rates at Vizag airport are based on the following slabs : (i) upto 40 MT, (ii) Above 40MT upto 100MT and (iii) Above 100MT. Since, the weight slabs mentioned for Parking and housing charges as per AAI tariff card are different from the ones mentioned in Schedule of charges on Page ,.47.of..Cp'" and no bridge has been provided between these slabs, FIA would request AIJlbodt9:t&e~hfir:m the manner in which the increase of 114% has /"" .<:.....-, i' .I'~ \. f ,'J: , " .. A / • .' • ~¥. ' ">"?-,'\ f ('i' <" r; !; ~1;:f ' ~~~ Order No. 38/2018-19 I 1:: ·4' li.:( , ~ 11 \ Page 57 of73 ~ 'I ~ ; .. ..~ .!:l~ ~ ~ . l ~ ,g ~ 1::. JJ,~ " e ' " " 4 - -a ..:: ."'0. '\':«1'," . ~ \ .....::I,,, ~ .~Q~ I been computed for first control period over the existing tariff rates ofparking & housing charges. FIA further submits that as per assumptions under Table 48 of the CP, "On account of increase in average housing and parking charges and increment in aircraft movement, these charges are proposed to increase by 114% from existing rates and an increase of 4% thereafter on YoY basis from FY20 onwards", the Authority has accepted these rates for the first control period. Yoar on year growth rate proposed by the Authority for domestic air trattic movement ("A TM'J, which forms 90% oftotal A TM, is only 9% as compared to the historical 5-year CAGR of 15.93% mentioned in Table 5 of the CPo FIA understands this conservetive approach considered towards estimation of domestic A TM may have resulted in 114% increase in the housing and parking charges. FIA submits that Authority should consider a 16% year-on year growth rate/or dblries'fic A TM and re-evaluate the 114% increase in housing a~crjJaikingchar~s: ' ~ As per assumptions taken 'b~ Vilag A irpoJuild~~~able 48 of the CP, 'Ground handling' services are assumed to growyear:-on-}iear aUhe rate equivalent to the combined growth rate ofA TM traffic and CUTEch.arges are assumed to grow year-on-year at the rate equivalent to the growth rate oftpta/ p asserlg.er traffic. This assumption has been accepted by the Authority as it is, except /irowth rqtec dtttraffic for CUTE charges has been considered on basis ofAuthority's forecast. Hdw~ive(, '.tariff rates applicable for each of Ground Handling and CUTE have not been me'J!io(lie.'f(bY'{l1B' ~{z~ g Airport!Authority in the CPoFIA submits that Authority ought to confirm: appIiSa.b./ ~:($harg~s for CUTE and ground handling for stakeholder review. Also, AuthOrity'Sf),oWqGOffs!aer 16 % & 25 % Year on Year (YOY) growth rate for domestic pas~iig~~}!~l[M ~~~pectiveIY while computing the said charges. ... i ~ Further, FIA submits that thel}.uth.atity.has.Rroposed INR 295 as UDF per domestic and international embarking passerigfiTj a 9'1% ina 'ease from the existing rate of INR 150 per domestic passenger. Accordingly, it is submitted that Authority should consider 25% YoY growth rate for domestic passengers while computing UDF. FIA further requests the Authority to confirm if landing charge for the first control period is NIL. " Comments from HPCL 16.12.HPCl submitted that "AERA be«proposed that the fueHhroughput chargfJs at;Visakh,apatnam Airport as 157.39 Rs. /KL effective 01.12;2018 to 31.03.2023. In this reg~rd, {t may be noted that in the absence ofany approved AERA order, we are charging existing rates to our customers. Hence the date of implementation of the tariffprior to AERA order will result in financial loss to us. View above, we request that any revision in Fuel throughput charges should be approved on prospective.basis only. " . Comments from IOCL 16.13. IOCl submitted that 'IFueI throughJpUt chames proposed ftor the controtI peno' d are as ft0 /Iows. Description FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 Fuel throughput 157.39 157.39 157.39 157.39 157.39 charges (Rs/KL) As per the consultation paper, Authority has proposed to consider 01 .12.2018 as the date of implementation of the proposed tariff rates. Indian Oil has no comments to offer on the rate . However, as proposed the effective date of implementation of tariff to be kept only after the date of the release of order. " Order No. 38/2018-19 Page 58 of 73 Comments from BAOA 16.14.SAOA submitted that "Authority's order may please rationale behind authorising the amount of RS.157.39 as FTC, as to the service being provided by airport operator for levying charge and, how it has been calculated to be Rs.157.39 per KL. Further, 'authority ' may please provide for 'Airport Operator' to levy the charge directly to the aircraft operator, uplifting ATF, rather than FTC being charged thorough the 'Fuel Supplier Company'. We are available for further discussionslclarification on our above submissions to the Authority. " AA/'s submission on GoAP's, FIA's, HPCL's, IOeL/s and BAOA's comments ,.,...,. . ~ I'U'~ 16.15 . AAI, in response to GOA p JS ,C(;iMtn e ~ts ~ JSUbmitted that- le:, . . . ~ . " ... I I ~. "In the proposed rate card to'~WEiive off the nighCparking charges in principle for all domestic scheduled operators at Visakhapatnam Aft:doi;t·Jfthe State Government has brought the rate of tax (VAT) on ATF <'5%. The,i:Jbove;waiver,df night parking charges (between 2200 hours to 0600 hours) will be made applicable from the date of implementation of < 5% tax on ATF by the State Government. " J 'f IJ . In the event of upward revision ;nthe'lax,rate,ofATF by the State Govt., the relief of free night parking charges will als(j(b~ , deemea·:id'pe withdrawn for all the airports within the '""?" of the said State4:>· ],L:W; :::./ ,Ill 16.16 .AAI, In response to FIA's cO '1;l.1L1e ~t~,~sub ~lttec:lAhat- "AAI has proposed 114% incre?se in Par;kiog a/?dhousing charges based on an average increase in parkinglhousing charges and 'same rate has been proposed for Domestic and International flights." "As per agreement, an amount of Rs 37 per pax is to be charged from Airlines by Mis SITA on account of cute charges and pay the royalty to AAI @ Rs 17.55 perpax . AAI recovers Royalty@ 31.81% from following Ground Handlers Mis Taurus Aviaiton Services Pvt. Ltd. Mis VisiC!)~ ~ via tion +yt. t Tp. II Mis Visakha E,!(e{pii~es Mis Sri Sai Sampath Aviation Handling Service .AAI recovers Royalty@13% from Air India Air Transport Services Limited (AlA TSL) on account of GH charges. 16.17.AAI also submitted that "Vishakhapatnam is a civil enclave and landing charges are being claimed by MOD (Navy) ." 16.18.AAI, in response to HPCl's and IOCl's comments about Fuel Throughput charges, . submitted that "AAI agrees with the comments of HPCL and IOCL and accordingly the new rates will be made applicable from a prospective date by issuance of AId" 16.19.AAI, in responseto SAOA's comments about Fuel Throughput charges, submitted that "Throughput Charges are akin to (oyalty charges and as per agreement between the airport operator and the oil com~?P!~s~JI)¢.S~ ~'~ ::/o~ervices and comes under GST. n " ,t ,.\ 1';" :---.. 1 (//.... .' ., 111'41' "~) ' ~~I . I ~" 4~: .,\ l' l~ i~ 1. ;. ~ ;.~ \ Order No. 38/2018-19 ~ . 'l::>V~ Page 59 of73 .a ..'q ~':.~ ...v .s \ ~ 9,. ,If'l~~ "rn~ ;;;: \ to\1l . ~\ ,~ ~,:< 0." . _. to.-i" 'O::rcReO lll(ll~~> Authority's examination of the comments of GoAP, FIA, HPCL, IOCL and BAOA and AAI's views 16.20.The Authority notes that waiver clause of night parking charges reads that night parking charges shall be exempt if VAT on ATF is <5%. Since, night parking charges are already exempt at present, no further action is required. Regarding the comments of FIA for revising the increase in ATMs, the Authority has gone by the 10 year CAGR in estimating passenger throughput and the increase in ATMs assumed would be in line with the estimated increase in passenger traffic. The Authority, therefore, is of the view that the growth in ATMs ; , ~s ' ~sumed, is reasonable. r; ~ " .. f ')./ ' , 16.21.ln response to HPCL & IOCl.::',s CO r) c~ r n regan;Hng approval of fuel throughput charges on , . , ' . 0/ prospective basis, the Authority: states thaVtt'le charges would be approved on prospective basis only . 16.22.ln response to SAOA's comment O,n l ~ \.l el 'jthrOUghPut charges, average fuel throughput charges were computed by dividing revenue 'from fuel throughput during FY 2017-18 by fuel upliftment during that year. FUfthJfhhe.k Q1tHprity agrees with AAI response. Revenue from fuel throughput services fo r ~~i~g.riS ;~ ~.2~~()~klty charges wherein oil companies are the service providers. Tariff to be ~Cha rgeQlDy ;Suc tO il companies/ fuel suppliers shall be subject to review by the Authority in ' conj u n¢ t i Q n : ' w i th :t~ r i ff as determined in this order. Further, the "" . "4 " "" \ Authority shall take into consideration any change in existing arrangement, of levying fuel throughput charges, based on mutual agreement amongst the concerned parties viz. oil companies, airlines and the airport operator. Decision No.1 0 Regarding Aeronautical Revenues 10.a. The Authority has decided to consfder- UDF at f300 per passenger for both domestic and intern~tional pas~engers, 10.b. The Authority has decided to consider Aeronautical Revenues as given in Table 54. 10.c. The Auth ority ' has decided to true up the Aeronautical Revenues of tho first Control Period based ~ n actual Aeronautical Revenues earned at the time of determination of tariff for the next Control Period. Order No. 38/2018-19 Page 60 of73 17. MULTI YEAR TARIFF PROPOSAL SUBMITIED BY VIZAG AIRPORT 17.1. Vizag Airport vide its submission proposed the following tariff (excluding taxes) for the first control period from 01.04.2018 to 31.03.2023 with effect from 01.02.2019. 17.1.1. Parking and Housing Charges Weight of Unit FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 the Aircraft C:~~ ,..,' Parking charges ",':~ ~jr" '~& '" ..': r,J,!. L. L • • ,~..' ,, "" ~ I hourI Ix ;0". Upto 25 MT 3.6(1; I;';1/ . ,,' 3,1 i~ 3.24 3.37 3.51 MT ' r A -:'f, I ~~: I.r 75.00 +~ 7:8 ~00 ' ~ ~/ i ~~~ 81.12+ 84.36 + 87.74 + ~I . ~~~~~ (4 Above 25 MT hourI 4.00 in \ 4.33 in 4.50 in 4.68 in up to 50 MT MT excess of 25 j exce~s _of excess of 25 excess of excess of 25 MT j h~ 2 5/MJ" 1 MT 25 MT MT 175.00 + ; jJ..~~ +82 @O f~ I;' , 189.28 + 196.85 + 204.73 + r.;;tiW i ,'32::' Above 50 MT V hourI 8.00 i n~" "a . In 8.65 in 9.00 in 9.36 in up to 100 MT excess of 50" : " ~~c"~;~~~tq.f: I,lL.:l - xcess of 50 excess of excess of 50 MTJ 1 ~" ~" ,l,J~ J f;50 , . ' J 'M ,_ : . ~1 , 'l:i ' 'i I ~ · MT 50 MT MT 575.00 + 59'8:00 -I 621.92 + 646.80 + 672.67 + Above 100 "1 ~I hourI P1' O"":4 o'~ ir MT to 200 10.00 in" r IA 10.82 in 11.25 in 11.70in MT MT excess of excess of excess of excess of excess of 100 MT 100 MT 100 MT 100 MT 100 MT 1575.00 + 1638.00 + 1703.52 + 1771.66 + 1842.53 + Above 200 ~I hourI MT MT 11.00 in 11.44 in 11.90in 12.37 in 12.87in excess of excess of excess of excess of excess of 2"OQ,,:MT 200 MT "" 200 MT 200 MT 200 MT ...... r Housing charges V hourI Upto 251V1T 6.00 6.24 6.49 6.75 7.02 MT , I . ~" 150.00 +', 156.00 1+1 162.24 + 168.73 + 175.48 + Above 25 MT V hourI 8.00 in 8.32 in 8.65"in " 9.00 in 9.36 in up to 50 MT MT excess of 25 excess of excess of25 excess of excess of 25 MT 25 MT MT 25 MT MT 350.00 + 364.00 + 378.56 + 393.70 + 409.45 + Above 50 MT V hourI 16.00 in 16.64 in 17.31 in 18.00 in 18.72 in up to 100 MT excess of 50 excess of excess of 50 excess of excess of 50 MT 50MT MT 50 MT MT 1150.00 + 1196.00 + 1243.84 + 1293.59 + 1345.34 + Above 100 ~I hourI MT to;200 20.00 in 20.80 in 21.63 in 22.50 in 23.40 in MT MT excess of excess of excess of excess of excess of 100 MT 100 MT 100 IVIT 100 MT 100 MT 3150.00 + 3276.00 + 3407.04 + 3543.~2 + 3685.05 + Above 200 V hourI MT MT 22.00 in 22.88 in 23.80 in 24.75 in 25.74 in excess of .excess of "- excess of excess of excess of 200 MT ...... O'd'M :t : ' '7 ~ .' ' 2,00 MT 200 MT 200 MT ." ." '". ",2 J'" ". " ' _,'...,.. ', :-'"' "."'" , tlJ"·~,,, V;:'. :,'\, Order No. 38/2018-19 /4"/ .~ Page 61 of 73 l " Ijf ! · ~" If~,I ,~!\,<;1. , I t;:< ' ·~ :' ~} · .~t~ \ ~'C<. ·v ··... , .::, ...\ 'tf\.i1i\~ : ~ 1 ' l'\ :- I "'" . ~, . .. I.. ,.) ~. ..J.'/ Notes 1a. No parking charges shall be levied for the first two hours. While calculating free parking period, standard time of 15 minutes shall be added on account of time taken between touch down time and actual parking time on the parking stand . Another standard time of 15 minutes shall be added on account of taxing time of aircraft from parking stand to take off point. These periods shall be applicab le for each aircraft irrespective of actual time taken in the movement of aircraft after landing and before take-off. 1b. For calculating chargeable parking time, part of an hour shall be rounded off to the nearest hour. 1c. Charges shall be calculated on the basis of nearest MT. 1d. Charges for each period parking shall be rounded off to nearest rupee. 1e. At the in-contact stands and open stands, after free parking , for the next two hours normal parking charges shall be levied. After this period, the,qharges shall be double the normal parking charges. 1f. It is proposed to waive off the night parking .etfarg·es,i.n .prlnciple for all domestic scheduled operators at Visakhapatnam Airport if the State (GoVer'n m~n t'"ia SJb.t.ought the rate of tax (VAT) on ATF < 5%. The above waiver of night parking c ha t.g es(betwe e n~2200~ li' ours to 0600 hours) will be made applicable from the date of implementatjo ~of < 5%;taxon'ATF by the State Government. In the event of upward revision in the tax rate of AliF. by,the State ~Govt. , the relief of free night parking charges will also be deemed to be withdrawn for alrthe,airpbrts.lwlthln the jurisd iction of the said State. 19. The traffic on Flight operating under Regional Con'nectivity Scheme will be governed by AIC issued on this subiect b DGCA. , ~j ![ 1/ ' 17.1.2. Fuel Thro ughput Ct:J!arg,~~ : (, Ii 'I ' '" I Proposed Rate 157.39 1 17.1.3. UDF/ PSF chargE~~f;:;q ": ~ , , . , Proposed rate in USD Proposed rate in f Passenger (per embarking (per embarking passenger) passenger)1$=f 67 Domestic 355.00 5.30 [f', ., International 355;00 5.30 II r 1 1 ~ -11 I 2a. Collection charges: if the payment is made with in 15 days of receipt of invoice, then collection charges at ~ 5.00 per departing passenqer shal l be paid byAAI . No collection charges shall be paid in case the airline fails to pay the UDF invoice to AAI within the credit period of 15 days or in case of any part payment. To be eligible to claim thiscollection charqes, the airlines should have no overdue on any account with AAI. 2b. No collection charges are payable to casual ope r'ator'lnon ~sc heduled operators. 2c. For conversion of USD into ~tIl e rate as on the 1st day of the month for 1st fortnightly billing period and rate as on 16th of the month for the 2nd fortnigh tly billing period shall be adopted . 2d. Revised UDF charges will be applicable on tickets issued on or after 01/09/2018. 2e. No UDF will be levied for Transit Passenqers. 17.1.4. PSF- Security 3a. Vizag Airport has proposed to contin ue the eXisting rate of PSF-Security charges; _ 3b. ~130/- per embarking International/ Domest ic passenger. 3c. USD 3.25 per passenger in respect of the tickets issued against Dollar Tariff. 3d. Collection charges : if the payment is made within 15 days of receipt of invoice, then collection charge s at 2.50% of PSF per passenger shall be paid by AAI. No collection charges shall be paid in case the airline fails to pay the PSF to AAI within the credit period of 15 days. 3e. No PSF (Security) will be levied for Transit Passengers. 3f. For conversion of USD into INR the rate as on 1st day of the month for 1st fortnightly billing period and rate as on 16th of the 9') 0 ~~~ · f9t~ .t h e. 2nd fortn ightly billing period shall be adopted . If the payment is made within 1~., ~~~~ :9tr;eb~j.pt.;9~~ iII S , then collection at 2.5% of PSF per passenger is payable. } /'- '" " 'Iii ' r d ~ , ,~ 0"" '~ !/ ' ~.i:. (, 4t: , C~\'r ~ ~ , .~ , Q,~ \ '~ ' Order No. 38/2018-19 \f:~. \ .(~ , ~r Page 62 of73 , ~ \ ~' ., 17.2. The Authority has decided that the tariff for the first control period shall be applicable with effect from 01.02.2019. 17.3. The Authority has decided to accept the tariff rates of parking & housing charges and fuel throughput charges as submitted by Vizag Airport. 17.4. rate as on 17.5. 17.6. The Authority opines that Vizag..Airport sho!-l ld clearly mention the rates in 13.1.3 as UDF < ~t ~ ' . ',,' .... charges and alternatively not call it as PSF charges. 17.7. Based on above decisions of the Authority I the tariff card (excluding taxes) for the first control period is as follows: 17.7.1. Parking and Housing Charges Weight of , Unit Fv'18~19 ' FY"19~20 20 ~21 J 1- ' FY 21-22 FY 22-23 the Aircraft 't,v .~ I ' '. '. l " r , ," Parking charges V hourI Upto 25 MT 3.00 3.. 1.2 3.24 3.37 3.51 MT ... ~ _ " .. 75.00 + 78.00 + '81.12 + 84.16.+ 87.74 + Above 25 MT ~I hourI 4:00 in 4.16 iri 4.33 in 4.50 in 4.68 in up to 50 MT MT excess of 25 excess of excess df25 excess of excess of 25 MT 25 MT MT 25 MT MT 175.00 + 182.00 + 189.28 + 196.85 + 204.73 + Above 50 MT V hourI 8.00 in 8.32 in 8.65 in 9.00 in 9.36 in up to 100 MT excess of 50 excess of excess of 50 excess of excess of 50 MT 50 MT MT 50 MT MT 575.00 + 598.00 + 621.92 + 646.80 + 672.67 + Above 100 V hourI MTto 200 10.00 in 10.40 in 10.82 in 11.25 in 11.70 in MT excess of excess of MT excess of excess of excess of 100 MT 100 MT 100 MT 100 MT 100 MT 1575.00 + 1638.00 + 1703.52 + 1771.66+ 1842.53 + Above 200 V hourI ·.l·.. · · · ~ t y MT MT 11.00 in .<1.1'·;404 fiii'·;;;:;"'" 11.90 in 12.37 in 12.87 in excess ot l 'Je"";~hces s of excess of excess of 200 M1iJ 2Bpc.f ~o MT 200 MT 200 MT h ' ,. , 1 Order No. 38/2018-19 ,h '@ I ,lii: I 'i i Page 63 of 73 .... llji "'' " . l , ~" ' " ~\ w: . '()i '{f" T·' , •.ro ''k! ~~... ~ f ~C). \\ "',." <, ~ . ,'1,/ ""-..,. , ~. " Housing charges V houri Upto 25 MT 6.00 6.24 6.49 6.75 7.02 MT 150.00 + 156.00 + 162.24 + 168.73 + 175.48 + Above 25 MT V houri 8.00 in 8.32 in 8.65 in 9.00 in 9.36 in up to 50 MT MT excess of 25 excess of excess of 25 excess of excess of 25 MT 25 MT MT 25MT MT 350,00 + 364.00 + 378.56 + 393.70 + 409.45 + Above 50 MT ~ I houri 16.00 in 1,...16.Q4'in · 17.31 in 18.00 in 18.72 in up to 100 MT excess of 5~ )J:~~6 es~ or .. ·',:f#.X~( s s of 50 excess of excess of 50 MT ~,;~, l,l?O M~T iil I.M.J::v 50 MT MT 1150.00 + " ·1..1)9~ .OQ + r,x ~ 1 24 3 . 84 + 1293.59 + 1345.34 + Above 100 V houri MT to 200 20.00 in ~ 1 ~20 : ~OiP. ';' .~;; iI;Z1 . 6 3 in 22.50 in 23.40 in MT ~ex ~es s Of ~ :: MT excess of I}excess of excess of excess of 100 MT \ ~ O O tv1 l\ !i ~ 100 MT 100 MT 100 MT 3150.00 + 3 2 ~ 6. 0 0 ;J ~ i: 3407.04 + 3543.32 + 3685.05 + .f ,. fI"~" ( .;J. I· , Above 200 ~I houri 1 "\ 22 ~ 8 8 MT MT 22.00 in in: ,'Y\ .23.80 in 24.75 in 25.74 in excess of i ,1, .:•.·..~X!. ~...~.·. s. : ~I6tJ. <" . '@~c e s s of excess of excess of 200 MT ~:\ ; : ~2.9. :MT~~\ ~2 0 0 MT 200 MT 200 MT . Notes 1h. No parking charges shall be levied fort!l ~.first ltW;o 'b Q> UP~ 'J While calculating free parking period, standard time of 15 minutes shall be added on account of time taken between touch down time and actual parking time on the parking stand. Another standard time of 15 minutes shall be added on account of taxing time of aircraft from parking stand to take off point. These periods shall be applicable for each aircraft irrespective of actual time taken in the movement of aircraft after landing and before take-off. 1i. For calculating chargeable parking time, part of an hour shall be rounded off to the nearest hour. . 1j. Charges shall be calculated on the basis of nearest MT. 1k. Charges for each period parklnq-shall be rounded off to nearest rupee. 11. At the in-contact stanps and.opeRstands, after,free parking; for the next·two hours normal parking charges shall be levied. After this period, the charges shalfbe;douple.the normal parking charges. 1m.lt is proposed to waive off tine night parking charges in prlnciple -for-all domestic scheduled operators at Visakhapatnam Airport if the State Government has brought the rate of tax (VAT) on ATF < 5%. The above waiver of night parking charges (between 2200 hours to 0600 hours) will be made applicable from the date of irnplementatlqn of < 9% taxon ATF by the State Government. In the event of upward revision in the tax rate of ATI= by the State Govt., the relief of free night parkirv; charges will also be deemed to be withdrawnfor all the alrpofts Within thejOrisdiction of the said State. 1n. The tariff on flights operatinq .under Regional Connectivity Scheme will be governed by AIC issued on this subject by DGCA. 17.7.2. Fuel Throughput Charges Proposed Rate Per Kiloliter in ~ I 157.39 1 17.7.3. UDF Charges Particulars UDF- Domestic Passenger 300.00 UDF- International Passenger 300.00 Order No. 381 2018-19 Page 64 of 73 17.7.4. PSF-Security charges applicable as prescribed by MoCA Decision No. 11 Regarding Annual Tariff Proposal 11.a. The Authority has decided to consider 01.03.2019 as the date of implementation of the decided tariff rates. 11.b. housing charges and fuel 11.c. 11.d. ." ", Order No. 38/2018-19 Page 65 of 73 18. ANNUAL COMPLIANCE STATEMENT 18.1. The Airport Guidelines issued by the Authority have laid down the error correction mechanism with reference to the adjustment to the Estimated Maximum Allowed Yield per passenger, calculated using the error correction term of Tariff Year t-2 and the compounding factor. The error correction calculated as per the Airport Guidelines indicated the quantum of over-recovery or under-recovery due to increase or decrease respectively of the Actual Yield per passenger with respect to Actual Maximum Allowed Yield per passenger in the Tariff Year. 18.2. during the first control period will be 18.3. Decision No. 12 12.a. Compliance Statements as per the Order No. 38/2018-19 Page 66 of 73 19. SUMMARY OF PROPOSALS Decision No.1 Regarding Traffic Forecast · 16 't.e. The Authority has decided to consider passenger traffic projections, given in Table 7. 16 1.b. The Authority has decided to accept ATM traffic projections submitted by Vizag Airport, given in Table 8 16 1.c. The Authority has decided to true up the passenger and the ATM traffic ofthe first Control Period based on actuals at the time of determination oftariff for the next Control Period. 16 Decision No.3 3.b. The Authority will undertake a study to determine FRoR for major AAI airports given the low debt structure ofAAI as a whole. 35 Decision No.4 Regarding Operation and Maintenance expenditure 39 4.a. The Authority has decided to consider operation and maintenance expenditure projections given in Table 31.. 39 4.b. The Authority has decided to ttUeup the operation and mainteflahceexpenditure of the first Control Period based on the actual expetuiitute at the · tim e ofde t~rm in a ti() n orta riff :for th e next Control Period. 39 Decision No.5 Regarding Non Aeronautical Revenues , 43 5.a. The Authority has dechJed tocp.,!sider the Non Aeronautical Revenues as given in Table 35 for determination of aeronautical tariffs for the first control period, 43 . 5.b. The Authority has decided to true-up the Non Aeronautical Revenues of the first Control Period based on actuals at the time ofdetermination of tariff for the next Control Period. 43 Decision No.6 Regarding Taxation 46 6.a. The Authority has decided to consider tax computation as given in Table 37. 46 6.b. The Authority has decided to true up tax of the first Control Period based on actuals at the time of determination of tariff for the next Control Period. 46 Decision No. 7 Regarding quality of service 48 7.a. Since the ASQ ratings of Vizag Airport hav~ .fJ.e.fw, .below the target rating 0'4.80, the Authority advises AAI to make all out efforts to improve .t~ e· S(§;Yide,,,,..fJlCA!ity at Vizag Airport. The Authority is ofthe view that it will examine ASQ ratings While.,trlJi?fJtJPln t ' ·f]if.1);ontrol period and if by then Vizag Airport .: ..; r ." , -~ \ : . . / i ' ;· ',' ;' 1: ~ .. - .~ , ';" ~ ~ \ ~ L'i~ ; ~ Order No. 38/2018-19 :• ;:I': l, ~~Pi ' ~ " Page 67 of 73 ~ ; : ..: ~ . ": ' --' ", ~ ~ . ":;. - r<"f-ill " {1l ~ .>.. ' ' ~ b " F \ ··...Iil ~ t:;:.0 t... t'"": '-- \:}.... " , "0 --.- \'. / ,.....nIJr;ut: Rp(/l'\,c\\v<'1,-: is unable to achieve the said target, the Authority will consider imposing penalty on Vizag Airport as appropriate 48 Decision No.8 Regarding prior period shortfall 50 8.a. The Authority has decided to consider the revised aeronautical revenues for FY 2016-17 and FY 2017-18 as given in Table 40 and accordingly consider prior period shortfall as given in Table 41 for truing up in the current Control Period. 50 Decision No.9 Regard ing ARR 53 9.a. The Authority has decided to consider theARRas provided in Table 44for determination of aeronautical tariffs for the first Control Per((),d. / ~~ ~: ::,: ;. 9.b. The Authority has decided to true qp, fiJllthe pdilding bjpgks ofARR of the first Control Period based on actuals at the time of determination of UHrffforthe next Gh'htrol Period. 53 Decision No. 11 Regarding Annual Tariff Proposal 65 11.a. The Authority has decided to consider 01.02.2019 as the date of implementation of the decided tariff rates 65 11.b. The Authority has decided to accept parking & housing charges and fuel throughput charges as submitted by Vizag Airport. ,65 11.c. The Authority has decided to consider UDF of ~300 perpax for both domestic and international passengers. Additionally, Vizag Airport should only specify the UDFln INR denomination and omit USD denominated u'bF amount. 65 . 11.d. The Authoriy has decided that PSF-Security chf!rges sho,uldbe as prescribed by MaCA. 65 Decision No. 12 Regarding Annual Com pliance : 66 12.a. Vizag Airport shall submit the Annual Compliance Statements as per the Guidelines for all the tariff years from FY 2018-19 to FY 2022-23 of the first control period along with the MYTP for the next Control Period 66 Order No. 38/2018-19 Page 68 of 73 20. ORDER 20.1 In exercise of power conferred by section 13(1)(a) of the AERA Act, 2008 and based on the above decisions, the Authority hereby determ ines the aeronautical tariffs to be levied at Vizag Airport for the First Control Period from 01.04.2018 to 31.03.2023 effective from date of this order and the rate card so arrived at has been attached as Annexure 1 to the Order. The UOF rates indicated in the tariff card are also in accordance with section 13(1)(b) read with rule 89 of the Aircraft Rules, 1937. The rates approved herein are the ceiling rates, exclusive of taxes if any. ,By the Order of and in the Name;1Au t~...... ,1'1' . &~~ AGM (F) To, Airports Authority of India Rajiv Gandhi Bhavan Safdarjung Airport New Delhi -110 003 Order NO. ·38/ 2018-19 Page 69 of 73 Table 1: Technical Details of Vizag Airport .4 Table 2: Summary of stakeholders' com ments 6 Table 3: Projected annual passenger traffic as per Vizag Airport submission 1:2 Table 4: Projected annual ATM traffic as per Vizag Airport subm ission 12 Table 5: 10-year historical passenger traffic data of Vizag Airport 13 Table 6: 1O-year historical ATM traffic data of Vizag Airport ~ 13 Table 7: Projected annual domestic passenger traffic as per the Authority's Examination 14 Table 14: Depreciation on additions to RA E(.~~rfpg,F;r ~1'9 ;~f ,and FY 17-18 as per Vizag Airport's submission (in ~ lakhs) 21 Table 15: Net additions to RAB as on 01.04.2016 during FY 16-17 and FY 17-18 as perVizag Airport's submission (in ~ lakhs) 22 Table 16: Opening RAB as on 01.04.2018 after considering additions and depreciation respectively during FY 16-17 and FY 17-18 as perVizag Airport's submission (in ~ lakhs) 23 Table 17: The Authority's examination of normative cost of additions to capital assets of Vizaq Airport 24 .. ( ' . Table 18: Additions to RA'B as on 01..04.2018 during the first,control periQa as per Vizag Airport's submission (in ~ lakhs) : , ; ; , 25 Table 19: Asset allocation of Terminal BUilding Expansion during the control period as per the Authority's Examination (in ~ lakhs) , 26 I Table 20:'Additions to RAB as on 01.04.2018durihg til e first control period as per tr.e Authority's examination (in ~ lakhs) 26 Table 21: Depreciation on opening RAB as on 01.04.2018 during the first control period as per Vizag Airport's submission (in ~ lakhs) 29 Table 22: Depreciation on additions to RAB during the first control period as per Vizag Airport's submission (in ~ lakhs) 29 Table 23: Total depreciation on RAB during the first control period as per Vizag Airport's submission (in ~ lakhs) ' 1• • •• •••• • • • • • • •• • •• • • • •• • • . • • •• •• • • •. • •• •• • • •• • • • • • • 30 , Table 24: Depreciation of aeronautical asset of terminal bUilding expansion during the first control period as per the Authority's examination (in ~ lakhs) 31 Table 25: Depreciation on addit ions to RAB d ~r.irr~; ; f6f 'fir~~ ·c (2,ntrol period as per the Authority's =J ~I ~. .. • ' 1ft. . -. examrna. t' Ion (iIn" Ia kh s ) ,1;• •." ...... ' ~i. , 3 2 Table 26: Total depreciation on RAB dur~~f e ~ rS:f~~~ t ro l p ' ~i~~i as per the Authority's exam ination (in ~ lakhs) '\.:(E \·i: ; S\.\ 32 ~ I 1 . ~ .~ Order No. 38/2018-19 ' , ~ !;, ~:.<;<\ 1 . Page 70 of 73 \ '?,< . 'ti:-~ '\'~' q, .s~<§ "., ~1-'Jo . .~\ i>' ,,' ... . , 'J) I' c R I; !Jl I I ;\~ (J:..;.» : ' . ' ..-'" _..... Table 27: Average RAB as per Vizag Airport's submission (in ~ lakhs) 32 Table 28: Revised RAB as per the Authority's Examination (in ~ lakhs) 33 Table 29: Assumptions made by Vizag Airport for each item of Operation and Maintenance Expenditure ...... 36 Table 30: Projected O&M expenditure by Vizag Airport for the first control period (in ~ lakhs) 3'1 Table 31: Revised O&M expenditure as per the Authority's Examination (in ~ lakhs) : 37 Table 32: Assumptions made byVizag Airport for each item of Non-Aeronautical Revenues .40 Table 41: Revised prior period shortfall of FY 2016-17 and FY 2017-18 as per the Authority's examination .(in ~ lakhs) 49 Table 42 : ARR computation as per Vizag Airport for the first control period (in ~ lakhs) 51 Table 43: Shortfall computation for FY 18-19 to FY 22-23 as per the submission of Vizag Airport (in ~ lakhs) : 51 Table 44: AR R com putatlon as:per the Allthority for the firstc0:ntrol perio~t (11) ~ lakhs) 52 Table 45: Shortfall computatiof tor the first control period .as per the Authority's,examination (in ~ lakhs) ...... 52 Table 46: Computation of total shortfall for the first control period as per the submission of Vizag Airport (in ~ lakhs) · , 54 I ' Table 47: Revised total shortfall (before considering UDF) as per the-Authority (in ~ lakhs) 54 Table 48: Revised aeronautical revenues from UDF as per the Authority (in ~ lakhs) : 54 Table 49: Revised total shortfall (after considering UDF) as per the Authority (in ~ lakhs) 54 Table 50: Assumptions made by Vizag Airport for each item of Aeronautical Revenues 55 Table 51: Projected revenue from aeronautical services as furnished by Vizag Airport for first control period (in ~ lakhs) 55 Table 52: Projected revenue from aeronautical services excluding UDF as per the Authority (in ~ lakhs) 56 Table 53: Aeronautical revenues from UDF as per the Authority's examination 57 Order No. 38/2018-19 Page 71 of 73 . " ", Annexure 1 Tariff Card approved by the AERA for Vizag Airport fo r the period 01.03.2019 to 31.03.2023 1. Parking and Housing Charges: Weight of Unit FY 18-19 FY 19-20 FY 20-21 FY 21-22 FY 22-23 the Ai rcraft Parking charges: , ~, ;"~ V houri ~~. <.1\ Upto 25 MT 3.00; ~~; ., (:-1· 3.~2 , .' 3.24 3.37 3.51 ,~, MT (~ i'li J s : I '"· .f ~ ...i\ 75.00 of'I " . ( 8.aD} ;;.1 9 i: ~ 81.12+ 84.36 + 87.74 + Above 25 MT V houri 4.00 in ' . 4.16 ~ W ( 4.33 in 4.50 in 4.68 in up to 50 MT MT excess of 25 I' excess of 25:( 1 '~xcess of 25 excess of 25 excess of 25 MT I· MT MT MT l I " fI,1T'I 175.00 + 18.2.~O ()I +1 189.28 + 196.85 + 204.73 + " ' : Above 50 MT V houri 8.00 in . .; xr!.\J 8.32.1 tn , .~ :" . 8.65 in 9.00 in 9.36 in up to 100 MT excess of 5gt ! ,:~e xces s of 50 ' excess of 50 excess of 50 , . '..1, ./ . ._~ , t; 1Thcess of~+ MI t ' . ~ ' ::~<'f '.'MT MT MT 575.00 .f1! i { \5 9 if~g~ 7J.'- · ,· _) J·,- -~ i. P ! ~~1V 621.92 + 646.80 + 672.67 + Above 100 " V houri w..-..w .40in . MT to 200 10.00 in 1o 10.82 in 11.25 in 11.70in MT . exqes$,of MT excess of .]' Ifl excess of excess of excess of 100 MT 100 MT 100MT 100 MT 100 MT . 1575.00 + 1638.00 + 1703.52 + 1771.66 + 1842.53 + Above 200 V houri MT MT 11.00 in 11.44 in 11.90 in 12.37 in 12.87 in excess of excess of excess of excess of excess of 200 MT 200 MT 200 MT 200 MT 200 MT Housing charges : _. I "'n V houri I I Upto 25 MT 6.00 6.24 6.49 6.75 7.02 MT 150.00 + 156.00 + 162.24 + 168.73 + 175.48 + Above 25 MT V houri 8.00 in 8.32: in I. 8.65 in 9.00 in 9.36 in up to 50 MT I\I1T excess of 25 excess of 25 excess of 25 excess of 25 excess of 25 MT MT I ~ ,MT - MT MT 350.00 + 364.00 + 378.56 + 393.70 + 409.45 + Above 50 MT V houri 16.00 in 16.64 in 17.31 in 18.00 in 18.72 in up to 100 MT excess of 50 excess of 50 excess of 50 excess of 50 excess of 50 MT MT MT MT MT 1150.00 + 1196.00+ 1243.84 + 1293.59 + 1345.34 + Above 100 V houri MT to 200 20.00 in 20.80 in 21.63 in 22.50 in 23.40 in MT MT excess of excess of excess of excess of excess of 100 MT 100 MT 100 MT 100 MT 100 MT 3150.00 + 3276.00 + 3407.04 + 3543.32 + 3685.05 + Above 200 V houri 25.74 in 22.00 in 22.88 in .23.8,9jO.... "_ ~ . 24.75 in MT MT excess of excess of excess of exee~s,lOf' : 1 ,:; 'e xcess of 200 MT 200 MT 200 MT ~M-l"" -- ~ ~ q9 M T "~to )I' . ~ Order No. 38/2018-19 :-' 1 Page 72 of 7 ~...~ . • n, 3 ~I~. ~ ~;~t~l t# 0 1~:~ ~~ ~ ?: \i'~ \ ~ ;.,~:\ 'l~o . - ~(j .. Notes 1a. No parking charges shall be levied for the first two hours. While calculating free parking period, standard time of 15 minutes shall be added on account of time taken between touch down time and actual parking time on the parking stand . Another standard time of 15 minutes shall be added on account of taxing time of aircraft from parking stand to take off point. These periods shall be applicable for each aircraft irrespective of actual time taken in the movement of aircraft after landing and before take-off. 1b. For calculating chargeable parking time , part of an hour shall be rounded off to the nearest hour. 1c. Charges shall be calculated on the basis of nearest MT. 1d. Charges for each period parking shall be rounded off to nearest rupee. 1e. At the in-contact stands and open stands, after free parking, for the next two hours normal parking charges shall be levied. After this period, the charges shall be double the normal parking charges. 1f. It is proposed to waive off the night parkingch'~ rges in principle for all domestic scheduled operators at Vlsakhapatnam Airport if the State Govelr'rrme'n f'has brought the rate of tax (VAT) on ATF < 5% . The above waiver of night parking cHatg'es'(betWeen 2200;hours to 0600 hours) will be made applicable from the date of implementatlon:of< '5% l ax,on'ATF by the State Government. In the event of upward revision in the tax rate of ATF 'by the Sta t e i ~0vt., the relief of free night parking charges will also be deemed to be withdrawn for all th.eairports witllin the jurisdiction of the said State. 19. The tariff on Flights operating under Reg'fonal Connectivity Scheme will be governed by AIC issued on this subiect b DGCA. j. , I j /1 il \1 ~ , !( 2. Fuel Throughput Charges ;J r 'i{1 I ,. \' , f'~ , ~ "., ,,/ ..- "" . ~ . Proposed Rate 157.39 3. UDF Charges , ~> , -c,. , d Particulars Proposed rate per embarking passenger in f UDF- Domestic Passenger 300 .00 UDF- International Passenger 300 .00 1) Collection Charge: If the payment is made within 15 days of receipt of invoice then collection charges at ~ 5 per departing passenger shall be paid by AAI. No collection charges shall be paid in case the airline, fails to\pay the UDF invoice.to AAI ·witbi.o the.credit period of 15 days or in case of any part payment. To be eligible to claim this colle ction charges, the airlines should have no overdue on ~TlY accountwith AAI. Wherever collection charges are payable the amount shall be settled within 15 days, 2) No collection charges are payable to casual operator/non-scheduled operators 3) For conversion of UDF in foreign currency, the RBlfEtferenc.!=l conversion rate as on the last day , of the previous month for tickets issued in the 1st fortnight and rate as on 15th of the month for tickets issued in the 2nd fortnight sha ll'be adopted. .~ 4) Revised UDF charges will be applicable on titkets issued on or after 01.03.2019. 5) 1. The following categories of persons are exempted from levy of UDF: a. Children (Under age of 2 years) b. Holders of Diplomatic Passport, c. Airlines crew on duty including sky marshals & airline crew on board for the particular flight only (this would not include Dead Head Crew, or ground personnel), d. Persons travelling on official duty on aircraft operated by Indian Armed Forces. e. Persons travelling on official duty for United Nations Peace Keeping Missions. f. TransiUtransfer passengers (this exemption may be granted to all the passengers transiting upto 24 hrs "A passenger is treated in transit only if onward travel journey is within 24 hrs from arrival into airport and is part of the same ticket, in case 2 separate tickets are issued it would not be treated as transit passenger"). g. Passengers departing from the Indian airports due to involuntary re-routing i.e. technical problems or weather conditions ~ · :t:; ~:~ ~ .~'''(· -. , ~ 'i\ " .'(/~ · ' " l~. '::S , 4. PSF-Security ch arges applicable as prescribed by Mo.cpi · q; ". f ~'::> '> \ Order No. 38/2018-19 "., .@~ ~~\ .[5) Page 73 of 73 ~,f" .:1\' 1' oS J'" .... .;; M ~ 0 -0 II<'! '!'...... J '~:r& ~ #/ " , "OilO,h :_.... _,.1,,10 ty..'S ... /